Key Points
- UniCredit has formalized a €10 billion all-share offer for Banco BPM.
- The proposed exchange ratio values BPM shares below market prices, sparking investor expectations of a revised bid.
- CEO Andrea Orcel targets at least a 15% return and hints at potential cash enhancements to the offer.
- Credit Agricole, BPM’s largest shareholder, is increasing its stake to bolster its influence.
UniCredit has filed its binding €10 billion ($10.5 billion) all-share buyout offer for Banco BPM with Italy’s market regulator. CEO Andrea Orcel affirmed the proposal’s adequacy, initially announced on November 25, and submitted it for regulatory approval. The bid sets a price floor at an exchange ratio equivalent to €6.657 per BPM share, notably below Friday’s closing price of €7.846. This suggests investor optimism for an enhanced offer.
Orcel described the initial proposal as fair and designed to deliver shareholder value, asserting that any acquisition must outperform returns from UniCredit’s share buybacks. A seasoned M&A strategist, Orcel aims for at least a 15% return on any deal. He has hinted at possibly augmenting the BPM bid with cash in the future, provided the transaction aligns strategically and exceeds financial benchmarks.
Banco BPM has been a long-standing target for UniCredit, but Orcel previously hesitated due to the acquisition premium embedded in BPM’s share price. The accelerating pace of domestic consolidation has now pushed him to act. UniCredit’s offer includes 175 newly issued shares for every 1,000 BPM shares, representing a marginal 0.5% premium to BPM’s pre-bid price and a 15% premium relative to BPM’s valuation before its November 6 bid for fund manager Anima Holding.
Orcel has emphasized UniCredit’s resilience and diversification, coupled with a total distribution yield twice that of BPM, as compelling reasons for BPM investors to back the merger. Despite this, Credit Agricole (CA), BPM’s largest shareholder, has applied to the ECB to increase its stake in BPM to 19.99%, leveraging derivatives to boost its holding to 15% from under 10%. CA has partnerships with UniCredit and BPM, positioning itself as a critical stakeholder in the ongoing negotiations.
Orcel maintains active discussions with key parties, including CA, to strengthen commercial alliances and navigate regulatory hurdles. The deal’s progression reflects UniCredit’s disciplined M&A approach amid an increasingly competitive banking landscape.
