Tit for Tat: UniCredit's Power Move for BancoBpm
UniCredit proposes takeover of BancoBpm: at the intersection of recovery and potential downfall
In a dramatic turn of events, UniCredit's highly-anticipated public exchange offer for BancoBpm officially hits the market. But don't expect keen shareholders to get their hands on UniCredit shares just yet - transactions won't commence until tomorrow.
Here's the deal: BancoBpm shareholders can now exchange one Bpm share for 0.175 newly issued ordinary shares of UniCredit. However, these will drop to 0.166 after both banks' dividend payouts. The offer will remain open until June 23, which could be extended to June 30 if necessary. All eyes will be on the numbers to see if UniCredit can snare a thrilling 66% stake in its rival. If they reach this milestone, the deal will go ahead, merging the two banks. In the least likely scenario, Piazza Gae Aulenti might quietly settle for a 50% majority plus one share, moving things forward even if the official target is missed. But if they fall short, later regrets will linger, as the deal will lapse, and life for both banks will continue along their separate paths.
It's worth noting that Piazza Gae Aulenti keeps all options open for the next fortnight. Should better offers materialize (and counterbids are always exciting), the bank has until June 21 to make a move. Furthermore, the drama doesn't end even after the June 30 deadline (should it not be extended); Banks are free to maneuver until July 1, the day before the pay date.
Singing a Different Tune?
If the offer seems uncertain, it's due to several factors, including UniCredit's ability to back out if specific conditions are not met. For instance, UniCredit could bail if the price of their Opa for Anima Sgr rises above 7 euros. And, as it stands, Bpm's share price still hovers above the offer, making it a hard sell for shareholders. But only time will tell whether share prices will pivot in either direction in the coming weeks.
It's a critical juncture for both banks, and May 7 couldn't come fast enough as they disclose their first-quarter accounts. Investors will scrutinize each bank's results and guidance, taking into account the current economic climate. Needless to say, it will be a daunting task to make sense of it all.
BancoBpm's Battle Cry
In response to UniCredit's bold move, Piazza Meda has wasted no time slamming the offer as inappropriate, undervaluing BancoBpm. According to BancoBpm, the lack of a control premium, financial penalties, and value transfers would hit Bpm shareholders hard. Alarmingly, in a potential merger, BancoBpm shareholders would secure just 14% of the combined bank's profits, despite contributing 18% of the total entity.
Moreover, BancoBpm calculates that it would miss out on €0.45 billion in net profits by 2027, which would have been realized under a standalone strategy. And synergies? BancoBpm expects to take a hit too, with benefits favoring UniCredit shareholders.
Enrichment Insights
- Regulatory Approvals: The deal is subject to regulatory approvals, including antitrust reviews and "golden powers" clearances, protecting national security interests in Italy.
- Waiver of Conditions: UniCredit has waived conditions related to the Anima transaction to provide more clarity and certainty to shareholders.
- Market and Financial Metrics: The success of the offer depends on meeting UniCruit's financial metrics, although challenges remain.
- CEO's Assessment: UniCredit CEO Andrea Orcel has expressed concerns about the deal's prospects, citing uncertainty over regulatory hurdles and potential fines for non-compliance.
- Market Premium: The premium offered for Banco BPM's shares has increased due to changes in market conditions and the execution of the Anima transaction.
Investing in UniCredit's public exchange offer for BancoBpm could potentially lead to changes in business strategies and financial prospects for both banks, as the offer remains open until June 23. If successful, the merger of the two banks might see UniCredit acquiring a significant 66% stake, but there's also a possibility of Piazza Gae Auletti settling for a 50% majority plus one share instead. However, should the offer not meet its target or better offers materialize, both banks may continue along separate paths.
It's crucial for investors to closely examine the first-quarter accounts of both banks on May 7, considering the current economic climate, as these financials will play a significant role in their future investing decisions in the business world.
