Unicreit Spa said it will evaluate the next step in pursuing BANCO BPM SPA after Italian court beats the government for some conditions over the acquisition while keeping others intact.
In a ruling issued on Saturday, Lazio’s administrative court repealed two government requirements, while confirming UniCredit’s withdrawal from its Russian business and maintaining a constant domestic investment in Anima Holding Spa, the newly acquired asset management manager at BANCO BPM. CEO Andrea Orcel had previously said the request could stop his acquisition plan.
Unicredit welcomes the decision as “clear evidence that the way in which gold power is used is illegal”, referring to the process of allowing authorities to block or impose conditions on transactions involving strategic assets. “Unicredit will now evaluate all relevant steps in a timely manner.”
Orcel faces a tight schedule, which will expire on July 23 as the offer period expires. The CEO will receive support from the EU, which is expected to denounce the government in Rome and question its way of interfering in the deal. But a plan by French rival Credit Agricole SA was announced shortly before the court to increase its stake in BANCO BPM, which complicated things.
BANCO BPM shares rose 2.4% at 9:55 a.m. Monday, while Unicredit fell 0.5%.
Unicredit filed an unsolicited full-share offer to BANCO BPM in November, with its terms barely providing Banco BPM’s closing price before bidding. They currently mean that Banco BPM is priced at about 14.6 billion euros ($17 billion), while the bank has a market capitalization of 15.2 billion euros as of Friday. This suggests that shareholders expect larger lenders to increase their 0.166 shares per share in smaller competitors.
The deal angered the Roman government and prompted Credit Agriculture Corporation (BACO BPM’s largest shareholder) to increase its shares in order to better defend its interests in Italy. Both French lenders have entered into commercial agreements with Italian lenders and are seeking to defend their interests in the largest market outside France.
Credit Agricole currently owns 19.8% of BACO BPM after it increased its stake earlier this year. It said Friday afternoon that it asked the European Central Bank to increase its holdings to more than 20%. It is not intended to “get or exercise”.
The court’s ruling is welcomed by all parties involved in the transaction. Banco BPM said Saturday that the court’s results confirmed the legitimacy of government conditions and urged UniCredit to clarify its intention to continue the offer. Government officials said the decision largely confirmed the legitimacy and structure of the prescription.
Unicredit said Banco BPM’s “illegal use”, or “frequently misleading” campaign, to discredit it could deprive BPM’s shareholders, and could improve its offer terms if the process has been ordered.
Unicredit’s pursuit of Banco BPM is just one of several overlapping transactions currently underway in the Italian bank. This proposed when the Roman government wanted to establish a large banking group around the Banca Monte dei Paschi di Siena Spa after the previous bail, and regarded BANCO BPM as a potential candidate for the merger.
The government is now supporting an agreement between Montepass and Mediobanca Spa following Unicredit’s move. The offer period for the acquisition began on Monday was about 15 billion euros. Mediobanca reiterated the opposition on Friday, saying the bid was too low and the deal lacked reasons.
