Intesa Makes Unsolicited Bid for UBI, Shocking Italy Bank Sector
Bloomberg
Published Feb 18, 2020 06:02
Updated Feb 18, 2020 06:58
Intesa Makes Unsolicited Bid for UBI, Shocking Italy Bank Sector
(Bloomberg) -- Intesa Sanpaolo (MI:ISP) SpA made an unsolicited 4.9 billion-euro ($5.3 billion) bid for smaller rival Unione di Banche Italiane SpA (LON:0LBN), unexpectedly launching one of the biggest European banking deals since the financial crisis.
Under the offer, announced around midnight on Monday, UBI investors will get 17 new shares of Intesa for every 10 UBI shares they hold. That valued UBI at about 4.25 euros a share, Intesa said in a presentation.
Intesa got positive initial feedback from the European Central Bank for the offer before the announcement, people familiar with the matter said, asking not to be named discussing confidential deliberations.
Intesa Chief Executive Officer Carlo Messina said on a conference call Tuesday that his bank’s offer is in line with ECB expectations on industry consolidation, adding that Intesa has no intention to raise its bid.
Shares in UBI rose as much as 29% and traded at 4.27 euros at 11:15 a.m. in Milan, just above the bid price. Intesa added 1.9% on Tuesday, as most Italian banks jumped on news of the bid. A UBI bond callable in January 2025 also climbed.
The all-share offer, announced late Monday, was made without the knowledge of UBI Banca’s board, according to a person with knowledge of the matter. The directors will meet as soon as Tuesday to discuss the bid. A UBI representative declined to comment.
UBI CEO Victor Massiah had just landed in London to discuss his bank’s new strategic plan with investors when he was informed of the bid, according to a person with knowledge of the matter.
The CAR Group, an investors pact that owns about 18% of UBI, also wasn’t aware of any planned bid and will need to take time to review it, people with knowledge of the matter said.
Italian banking had looked set for another slow year for deals as executives spoke of the need for consolidation but shied away from taking the plunge. The benefits of increasing scale and gaining synergies were weighed against regulatory hurdles, Italy’s weak economic prospects and execution risks from low share prices to capital concerns.
“The bid is very appealing for both ISP and UBI shareholders, as it would create a massive player in Italy, especially in the north, with very high efficiency levels and competitive product companies,” said Stefano Girola, a portfolio manager at Alicanto Capital SGR in Milan. “I think the announced synergies are just a starting point and more will come.”
Get The App
The combination creates a European lender with 8.7 billion euros in net interest income and almost 1 trillion euros in total assets. Combined profit amounts to 21.6 billion euros, based on 2019 financial data.
Intesa seems to have prepared the move well in advance; part of the deal involves it selling 400 to 500 branches to BPER Banca that the two banks operate jointly. BPER will call an extraordinary meeting to approve a 1 billion-euro rights issue to fund the transaction. The sale is already fully underwritten by Mediobanca SpA.
Intesa’s move also includes a binding agreement with insurer UnipolSai Assicurazioni, that provides for the disposal of insurance activities. The agreements were made to “pre-emptively address anti-trust issues,” the bank said.
UBI’s existing management “may have significant prospects in the group that will be born from this operation.” Messina said in a statement on Tuesday.
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.