BancoBpm, why the bank rejects UniCredit's offer

An offer with conditions deemed 'unusual'. Which does not 'in any way' reflect the bank's current and prospective conditions. And which, in addition to being marked by a "high degree of uncertainty", given that UniCredit is committed to Commerzbank in Germany, could create "heavy employment repercussions". In the aftermath of the 10 billion exchange offer (Ops) on BancoBpm shares, the board of directors of Piazza Meda responded to UniCredit. And the tone, as widely predictable, is that of a bride who has no intention of walking down the aisle.

BancoBpm would have time to express its opinion in a timely manner. In fact, the board will only be able to give its final verdict once the advisors have carried out the necessary in-depth analyses and shortly before the start of the subscription period, set for a few months from now. But as of now, 'on a preliminary basis and in the best interest of the shareholders', the bank led by CEO Giuseppe Castagna wants to speak to the market. And it wishes to highlight a few points. Starting with the fact that the takeover bid 'has in no way been agreed in advance'. The issue on which the board's attention is immediately focused is the financial terms of UniCredit's offer - all in shares - which reflects a premium of 0.5% compared to BancoBpm's official price on 22 November, valuing the shares at EUR 6.65. This is, it must be said, an essentially non-existent premium, and perhaps put on the table by UniCredit precisely in order to open the door to a revision. And yet this allows Piazza Meda to highlight how this choice is already turning into an 'implicit discount' of 7.6% compared to Monday's official price.

This is to say that the market has already gone well beyond the proposal and is already expecting an upward adjustment. It will only be seen with time if and how UniCredit will revise the offer. For now, stresses Piazza Meda, these are, however, financial terms that are 'completely unusual for operations of this type', and that 'in no way reflect the profitability and further value creation potential' for Banco Bpm shareholders.

The ex-popolare, until Monday, was committed to the implementation of its industrial plan. In short, there was prospective value that had been 'further strengthened' by the recently announced extraordinary transactions, namely the takeover bid launched on Anima Sgr and the acquisition of 5% of Mps. The focus was concentrated in particular on the product factories, from which it expected an 'even more important prospective' contribution, also to reduce at the same time 'its exposure to the risk of interest rate cuts'. Moves, these, which should have allowed the CEO of Piazza Meda to update the objectives of the industrial plan. And which, perhaps, are at the very root of the blitz by UniCredit, which would have seen in Castagna's dynamism a threat to its own positioning in the Italian market, where UniCredit generates around 45% of its revenues. Alongside this, however, one of the reasons for UniCredit's blitz could also be an attempt to anticipate Credit Agricole's possible moves: the French, who have long been sounding out the government for Mps, have long been aiming to grow in Italy. And at the top of the agenda are Anima and BancoBpm: here, the Banque Verte has a shareholding of around 9 per cent but with the ambition to rise, although the request to rise above 10 per cent has not yet been formalised to the ECB.

But BancoBpm goes even further. It emphasises how UniCredit's offer conditions 'the strategic flexibility' of the bank, limiting the management's 'room for manoeuvre on an autonomous basis', as happens in cases of companies subject to the passivity rule. But it calls UniCredit into question for the risks to which, it claims, it would subject shareholders. Starting with the "risk" connected to the growth manoeuvres in Germany, manoeuvres that are destined to generate a "significant dilution of the current geographical exposure". At the same time, BancoBpm points out that the record-breaking merger envisaged by Orcel would 'eliminate the legal autonomy' of the former popular bank, to the 'detriment of the brand' and 'significantly reduce competition in the Italian banking market'. And it emphasises the gross cost synergies estimated by UniCredit at EUR 900 million, 'i.e. more than a third of BancoBpm's cost base', a figure that 'raises serious concerns about the foreseeable repercussions in terms of employment and social issues'. Finally, a message that leaves the door open to possible countermoves: the bank 'will not neglect any strategic option that can further contribute to the objective of creating value for shareholders and all other stakeholders of the BancoBpm group'.