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UniCredit-BancoBpm, the three reasons (plus one) for Orcel's move

The offer, the timing and the unknowns: the uncertainty over Commerz, the moves on Anima and Mps and to protect Piazza Meda from the activism of the first partner Credit Agricole triggered the blitz

by Luca Davi

26 November 2024

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5' min read

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The unexpected shock came early in the morning when UniCredit unexpectedly launched a public share exchange offer for BancoBpm, following an extraordinary board meeting on Sunday. On the plate is an exchange, all in shares, worth 10 billion euro to convince the shareholders of Piazza Meda to get on board UniCredit, a bank worth six times as much on the stock exchange. The objective is clear: to remove from the Italian scene a medium-sized but rising group, and increasingly unwieldy after the Opa on Anima and the entry into Mps. And thus shore up UniCredit's position as the second national champion in Italy, moreover at a standstill in Germany, where the Commerzbank operation appears to be on the up. But who knows whether UniCredit's CEO, Andrea Orcel, might have decided to make a move - and thus offer a valuable backing to the government - with a view to thwarting possible foreign moves on BancoBpm by Credit Agricole, which, according to some rumours, was aiming to take over the former popular bank, given that the French already hold a 9 per cent stake in it.

Offer details

What is certain is that Piazza Gae Aulenti, after the blitz in Germany at the beginning of October (which encountered quite a few obstacles) is now moving into Italy. And it is dismantling the plans - perhaps more hypothetical than real - for a third BancoBpm-Siena-driven banking hub. On the table is an exchange of 0.175 new Unicredit shares for each Banco Bpm share. A 'non-binding' offer, Orcel points out, which sets the bar at 50 per cent of acceptances with the aim of rising above 66 per cent. To shareholders Orcel implicitly recognises 6.657 euro per share, 0.5 per cent more than last Friday's closing values of BancoBpm. A practically non-existent premium compared to average market values, although 15% higher than the values of Piazza Meda before the launch of the offer on Anima and Mps. Hence the expectations for a possible future cash adjustment, which some in the market estimate to be in the order of 15-20 per cent. For Enpam, the welfare body for doctors and dentists, a shareholder in Banco Bpm's consultation agreement, for example, 'the offer so far is low'.

We shall see. For now, UniCredit is certainly aiming to convince the shareholders of Piazza Meda more with the prospect of entry into a pan-European group, and a far-reaching industrial project, than with a cash payment. 'At a fair valuation, this acquisition will allow us to create great value for stakeholders on both sides, expand our territorial coverage, expand our customer base both retail and corporate,' Orcel said in a note.

The road map is mapped out. UniCredit, having obtained the OK from the regulators, expects to arrive with the exchange offer on the market between April and May, so as to close the transaction as early as June 2025. The impact on capital is expected to be low (70 basis points) while the dividend policy remains confirmed to 2026. The synergies, in particular, hang more on the cost side (around EUR 900 million estimated annual savings) than on the revenue side (EUR 300 million), while integration costs of EUR 2 billion are expected with adjustments of EUR 800 million.

The three reasons for the offer

So far the numbers. But what is behind the Orcel move? And why launch this offer now? Always a UniCredit's pet project, the merger with BancoBpm had already been nudged by Orcel in February 2022 when, having closed the Mps dossier, the banker saw the deal blow up in his hands due to a leak. Today the operation, drawn up with the legal advisor Crccd, is back on the agenda for at least three reasons. The first is defensive. Orcel knows that the balance in Italy is changing. The acceleration of BancoBpm with the takeover bid launched a few weeks ago on Anima, and then the knock-on entry on Mps (where Piazza Meda is set to have a 9% stake), risked marginalising UniCredit in a market, the Italian one, which in addition to being the operating base, is also the group's main driver, with 45% of revenues. The risk of being overtaken by BancoBpm - which, according to some readings, could aspire to build a maxi-pole behind Intesa Sanpaolo (firmly on top with 20% of the lending market) - was, in short, too great to be borne.

The second reason is an alignment of stock market valuations. At current prices, BancoBpm is now worth 7.2 times earnings, UniCredit 6.7. This makes the aggregation not only financially sensible but almost obligatory for UniCredit (yesterday down 4.4%). If Piazza Meda (yesterday +5.5%) was, as planned, a possible prey, perhaps even once the German dossier was closed, not moving today would have meant having to spend more tomorrow, given the market trend.

In the background, there is a third, more contextual reason. UniCredit is currently bogged down in Germany, where the dreamed 'takeover' of Commerzbank is likely to take a long time. Orcel acknowledged this in no uncertain terms in front of analysts. Since entering the German bank's shareholder structure at the beginning of September, the Berlin government has changed and the German management has changed. In short, time is needed to rebuild the bridges. And nothing is now certain, first and foremost the launch of the Opa. Indeed, the market is now beginning to glimpse a possible UniCredit disengagement, so much so that the German bank's share price plummeted -5% yesterday. Time will tell how things will turn out. If confirmed, the cooling of speculation could paradoxically play in favour of a relaunch of UniCredit in the future. But it is clear that any decision on the German bank will not come before April-May 2025. Regardless, Piazza Gae Aulenti must productively deploy the excess capital accumulated in recent years. So that it can write a new chapter to present to the market.

The unknowns and the French 'threat'

Now the reaction from BancoBpm will be seen. Around Piazza Gae Aulenti there is confidence that the proposal will go through. There is a well-established relationship of trust between CEO Orcel and BancoBpm chairman Massimo Tononi. More delicate, on the other hand, is the dialogue between Orcel and ceo Giuseppe Castagna, who has always pursued the stand-alone route and has so far succeeded with merit in escaping external aims (UniCredit in the lead) by extracting value from the bank and making the share price appreciate: how will Castagna and his board react? Orcel reportedly made a courtesy call on Sunday evening, on the eve of the announcement, to anticipate the deal. But it is realistic that, supported by the advisors (one looks to Mediobanca, Lazard and Citi) BancoBpm - whose board will meet today - will not bend easily. On its side, BancoBpm has the backing of the Lega Nord world, Giorgetti in primis. UniCredit, on the other hand, is putting on the table a move that guarantees the Italian character of Siena (on which Orcel has no designs, at least officially), and may find backing in some areas of the government. But the blitz in Piazza Meda may have the merit of protecting BancoBpm from the ambitions of Credit Agricole, a 9% shareholder. The French, according to rumours, did not take a favourable view of Castagna's raid on Anima and Mps, so much so that they moved under the radar with purchases on BancoBpm with the intention of later coming out of the closet. Who knows whether Orcel did not want to (and should have) burned the momentum, turning the tables. And that now, given the long-standing relationship with Banque Verte given the agreement on managed savings with Amundi, he will now first of all come to an agreement with the transalpine bank, as well as with the rest of the shareholders, so as to put the deal on Piazza Meda on a downward slope.