Banking risk

Unicredit launches voluntary public exchange offer on Banco Bpm. Orcel: we have no ambitions for Mps

UniCredit presents a voluntary public exchange offer for Banco Bpm for a total consideration of approximately EUR 10.1 billion, entirely in shares

25 November 2024

Castagna (Banco Bpm), l’attenzione sulla qualità del credito resti alta

6' min read

'At the moment, the offer we have submitted is non-binding, and there is no certainty that an agreement will be reached. The responsibility for evaluating this offer lies with the board of Banco Bpm and the shareholders of both institutions. We hope to meet them soon to discuss the details directly with them'. This was written on Linkedin and in a message on the bank's website, the ceo of Unicredit, Andrea Orcel.

Already scheduled for tomorrow, Tuesday 26 November, is the next meeting of the board of directors of Banco Bpm. The first disclosure by CEO Giuseppe Castagna is expected. The appointment, of course already scheduled before the announcement of the exchange offer launched by UniCredit, may give the board members the opportunity for an informal discussion on the move by the Orcel-led institution. The topic is not on the agenda at the moment, however, and therefore, barring any changes to a picture that remains decidedly fluid, no concrete stances are expected.

Unicredit has in fact launched a voluntary public exchange offer on all shares of Banco Bpm. This was stated in a note of the banking institution. The total countervalue of the offer of Unicredit to Banco Bpm, always in case of full adhesion, will be 10,086,832,606 euro. The amount is equal to the "monetary" valuation of the consideration, i.e. 6.657 euro per Banco Bpm share. The figure also takes into account the official Unicredit share price at last Friday's trading session, which was 38.041 euro.

The integration of Banco Bpm with Unicredit represents, for both, an opportunity for "ideal growth," reads the voluntary public exchange offer document. By adhering to the offer, all Banco Bpm shareholders would "benefit from the aggregation with Unicredit, as they would become the protagonists of an entrepreneurial initiative of excellence promoted by an authentic pan-European group with a global presence, such as the UniCredit banking group, which would then become the third European bank by market capitalisation. The bidder would in fact have the opportunity to accelerate and further strengthen the value creation outlined in the Unlocked 2022-2024 strategic plan through the aggregation of a bank with a profile consistent with the described strategic objectives'.

Unicredit expects that the execution of the exchange offer on Banco Bpm "will be completed by June 2025, with full integration completed within approximately 12 months thereafter" and with most synergies realised within 24 months. The Piazza Cordusio-based institution points out that it has 'a solid track record in successfully integrated acquisitions, with the necessary skills and management knowledge to execute them efficiently'.

Finally, the offer document states that Unicredit will launch a capital increase to support the Ops on Banco Bpm. The increase concerns 13.9 per cent of its capital. The shares will be used in the exchange offer. The increase will have to be approved by the extraordinary shareholders' meeting in April.

The voluntary public exchange offer on Banco Bpm - the note states - is autonomous and independent of the investment made by UniCredit in the share capital of Commerzbank. The discussions regarding Commerzbank have already been extended in respect of the upcoming elections (in Germany next February) of the bank's stakeholders. The position remains an important investment with downside protection and substantial upside potential.

Banco Bpm will meet its board of directors tomorrow morning. On the board's agenda, which was already on the agenda, will be the Ops launched by Unicredit as a surprise this morning.

Orcel: Europe needs big banks

In a call with analysts to present the ops project, Unicredit CEO Andrea Orcel emphasised that 'Europe needs stronger and bigger banks to help it develop its economy and compete against other major economic blocs. Thanks to the work done over the past three years, UniCredit is now well positioned to meet this challenge as well'.

In the event of success, the takeover bid for Banco Bpm "will consume 70 basis points of our excess capital" and will therefore not entail "significant deviations" on the bank's capital position and distribution to shareholders, UniCredit's CEO remarked. Orcel noted that 'the rationale' of the transaction 'from both a strategic and industrial point of view is very high', pointing out that 'the timing is right' because 'for the first time in a long time the valuations are aligned' and because 'with the UniCredit Unlocked plan we have shown what we can do'. "There is no reason why this team cannot focus on doing something more aggressively on a larger perimeter," he added. The offer price, Orcel admitted, 'appears very close to market values', but the banker emphasised that considering the levels 'prior to the opa on Anima and the speculation on the third pole', or even those of consensus for both banks, 'the premium is between 12% and 20%'. Orcel, finally, recalled that the presentation of the offer document is expected within 20 days and emphasised that he does not foresee a significant rationalisation of the physical networks: 'We do not see any great need for efficiencies on this front, on the contrary, we will invest in the network. The bulk of the efficiencies will be in the operational machines,' he concluded.

Regarding Mps, the ceo of Unicredit said he was not interested in shares in the Siena-based bank, in which BancoBpm has a 5% stake and was in the pipeline for an aggregation to form the third banking pole, in addition to having launched an opa on Anima on 6 November.

On the Commerzbank issue, however, Orcel made it clear that he will give the German financial system plenty of time to metabolise the move by Piazza Cordusio. "We will only proceed with a takeover of the German bank under certain conditions, which require a change in the positions of certain counterparties," the Italian banker emphasised. Orcel also recalled that 'out of respect for Germany and its elections' in any case 'there would be no possibility of moving in the short term and perhaps not at all'. 'While we wait we are calm in our position and can discuss it constructively without forcing the issue,' he concluded.

"Now they must evaluate Banco Bpm's Board of Directors and shareholders"

Orcel finally wrote on Linkedin and in a message on Unicredit's website that 'At the moment, the offer we have made is not binding, and there is no certainty that an agreement will be reached. The responsibility for evaluating this offer lies with the board of Banco Bpm and the shareholders of both institutions. We hope to meet with them soon to discuss the details directly'.

Political reactions

"I never like concentrations and monopolies. I was left with the fact that Unicredit should grow in Germany. I don't know why he changed his mind," said the minister Matteo Salvini on the sidelines of the XXIV edition of the Italia Direzione Nord review, promoted by the Fondazione Stelline, underway at the Milan Triennale. "Also because Unicredit has little Italian in it by now, it's a foreign bank. I am concerned, instead, that realities such as Bpm and Monte Paschi, which are collaborating with Italian subjects for a third Italian pole, are not put in difficulty. My question and that of many savers is: but is Bankitalia there? Is it watching?", the minister's words. Who concluded: 'As an Italian, I would like to know. I would not want anyone to stop the BPM and MontePaschi deal. But Bankitalia is there, so we sleep soundly'.

Financial reactions

"I don't comment on that. It is a market operation that the market assesses'. So said Matteo Laterza, CEO of Unipol, on the sidelines of the inauguration of the sixth red bench on the day against violence against women, in Via Melchiorre Gioia in Milan, responding to a question about the public exchange offer launched this morning by Unicredit on Banco Bpm. For Filippo Diodovich, Senior Market Strategist at Ig Italia, 'Unicredit has turned the spotlight on the Italian financial landscape with an announcement that could redefine the country's banking sector. This bold and strategic move marks a new chapter in the history of major bank mergers and acquisitions in Italy, aiming to create a colossus capable of facing the global challenges of the market'.