Intesa Wins Overwhelming Support for UBI Takeover Offer -- Update
July 31 2020 - 5:26AM
Dow Jones News
(Adds background, details of the deal and analyst's
comments)
By Pietro Lombardi
Intesa Sanpaolo SpA has secured strong support for its takeover
bid for smaller rival Unione di Banche Italiane SpA, a step that
paves the way for the creation of Italy's largest bank and might
kick off a long-awaited phase of consolidation in the
continent.
More than nine out of 10 UBI shares, or 90.2%, were tendered,
well above the 66.7% threshold Intesa was seeking to smoothly
execute the merger.
Intesa in February surprised the market when it launched the bid
for UBI. High costs and risks related to merger and acquisition
operations have been seen as obstacles to combination in the
overcrowded European banking sector. Last year, for example, merger
talks between Deutsche Bank AG and Commerzbank AG fell apart.
The deal will create a leading European player and strengthen
the financial system in Italy, Intesa Chief Executive Carlo Messina
said in a statement late Thursday.
With the tie-up, Intesa--now the country's second-largest bank
by assets after UniCredit SpA--will surpass its rival and become
the largest Italian lender and the eurozone's seventh-largest.
Intesa's offer was "a success beyond all expectations," Equita
SIM analyst Giovanni Razzoli said.
"The achievement of a wide adhesion will also have positive
consequences on the deal because it triggers a strong consensus on
the integration by all stakeholders, erasing the execution risk,"
Mr. Razzoli said.
Italian banks have struggled for years with bad loans amassed
during the financial crisis. Moreover, low interest rates in Europe
have hit their core business of making money through loans, making
it less profitable, mirroring a trend seen across the region.
Regulators in Europe have signaled they are willing to ease some
conditions for mergers. The European Central Bank in early July
published a draft guide saying that eurozone banks considering
M&As will be able to use temporarily internal models to
calculate capital requirements of the merged entity, and will be
allowed to use an accounting treatment known as badwill, while the
ECB won't necessarily ask for higher capital.
Badwill will play a key role in the Intesa-UBI deal. It is an
accounting treatment which allows buyers to book a profit if they
buy a target for less than its book value. When this happens, the
buyer can treat the difference as a gain.
As part of the deal, mid-sized lender BPER Banca SpA will buy
532 branches of the new entity, while insurer UnipolSAI
Assicurazioni SpA will buy the insurance assets of the branches
sold to BPER.
Intesa sweetened its offer earlier in July, adding a cash
component to its previous all-stock bid. UBI shareholders were thus
offered 57 European cents ($0.67) in cash and 1.7 Intesa shares for
each share they tendered.
Based on the value of the shares on Feb. 14--before the takeover
bid was announced--the offer values UBI shares at EUR4.8 each.
The board of the target lender had rejected the deal, even after
the offer was improved as it believed it didn't reflect the value
of the bank.
The data Intesa released late Thursday are preliminary, with the
final results to be published on Aug. 4.
"The achievement of the 90% adhesion also determines the
delisting of the UBI share since Intesa will not restore its free
float," Mr. Razzoli said.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com;
@pietrolombard10
(END) Dow Jones Newswires
July 31, 2020 05:11 ET (09:11 GMT)
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