Banco BPM soars on the French bid, but brokers see Golden Power as a wild card in the merger

(Il Sole 24 Ore Radiocor) - The latest chapter in the Italian game of Risk is playing out in France this time, as Credit Agricole is proposing a ‘friendly’ merger between its Italian subsidiary and Banco Bpm , which would remain listed on the Milan Stock Exchange with Giuseppe Castagna at the helm. The proposal – setting aside the possibility of a ‘golden power’ clause, which in theory cannot be ruled out – has already stirred up excitement amongst investors, with the Piazza Meda share surging (and not far off the record high of 17.2 euros reached in the summer, when rumours of a merger with Banca Monte Paschi Siena).

The rise in share prices already appears to be an initial ‘green light’ from the market, indicating that Banque Verte has moved ahead of expectations. For weeks, many observers had speculated that a possible M&A deal between BPM and Agricole would be postponed until after the general election in Italia, whilst the actual timeline has been much shorter: less than two weeks, in fact, after the shareholders of Rocca Salimbeni rejected the proposed public exchange offer (OPO) for BPM launched by Luigi Lovaglio (which paved the way for the offer from Intesa Sanpaolo ).

Equita’s analysts are not committing themselves for the time being, but note that ‘at first glance’ Credit Agricole’s proposal “appears attractive to Banco BPM shareholders, offering a premium, the payment of an extraordinary dividend” and an improvement in earnings per share “from synergies”. They point out that the transaction is “subject to the usual approvals, including the Golden Power authorisation, where Anima’s role within the combined entity will need to be assessed”. This refers to the asset management company, 89.95 per cent of which is controlled by BPM, whose future remains to be seen. Intermonte goes into further detail: according to their calculations, BPM is trading at around 9.75 times the estimated net profit for 2027, whilst the 20 per cent premium would imply a multiple of around eight times for Agricole Italia (and therefore lower). Any potential remedies on the antitrust front ‘would also appear limited’, involving around 30–65 branches, concentrated in Cremona, Parma, La Spezia, Piacenza and Lodi, ‘whilst the golden power would remain the main source of uncertainty’.

The constraints of the “golden power” which, looking back, were the reason for the failed takeover bid by Unicredit on Piazza Meda. We’ll have to wait and see this time, but in the meantime, the market has already had its say.