(Nov 25): UniCredit SpA made a €10 billion (US$10.6 billion or RM47.3 billion) all-share bid for domestic rival Banco BPM, opening a second major takeover front as chief executive officer Andrea Orcel also pursues Commerzbank AG.

Under the offer, Banco BPM investors will get 0.175 new shares of UniCredit for every Banco BPM share they hold, according to a press release. That values the bank at €6.657 a share, implying a 0.5% premium on Friday closing.

Shares of Banco BPM surged 6.2% at 9:11am in Milan, while UniCredit fell 2.9%. Commerzbank slumped as much as 7.2% in Frankfurt.

Acquiring Banco BPM, a long-held potential target for Orcel, would make UniCredit Italy’s largest lender by total assets and accelerate this year’s wave of European bank merger activity. The domestic offer comes during a lull in UniCredit’s efforts to buy its German rival, which faces stiff opposition from the government in Berlin.

“We cannot remain absent from” bank consolidation in Italy, Orcel said on a call.

The Italian government hasn’t yet commented on the proposed deal. French bank Credit Agricole SA, which owns a stake of approximately 9% in Banco BPM, declined to comment. Banco BPM didn’t immediately comment.

UniCredit’s bid for Banco BPM resumes a trend toward domestic bank consolidation in Italy after a pause last year. Banco BPM earlier this month bought a stake in Banca Monte dei Paschi di Siena SpA and is also seeking to take over asset manager Anima.

The sale of the government’s stake in Monte Paschi was another step in Prime Minister Giorgia Meloni’s effort to promote banking consolidation. Orcel’s move could make it more difficult for the government to foster the creation of a third major banking group, after UniCredit and Intesa Sanpaolo SpA

Intesa, the country’s largest lender, kicked of the latest rush to consolidate with its takeover of UBI Banca in 2020. That was followed by the acquisition of Credito Valtellinese SpA by the Italian unit of Credit Agricole SA in 2021, and BPER Banca SpA’s purchase of Banca Carige SpA in 2022.

“The offer seeks to strengthen UniCredit’s competitive position in Italy, one of the group’s core markets, creating an even stronger #2 bank,” UniCredit said in its statement.

Banco BPM, which has almost €200 billion of assets, has long been seen as a target for UniCredit to expand in the rich Lombardy region and add lucrative segments to its business, according to analysts.

A deal would incur integration charges of around €2.0 billion during year one, according to UniCredit’s release on Monday. Orcel said on a conference call that it wouldn’t affect 2024 dividends and the bank is committed to keep its dividend per share trajectory unchanged.

Uploaded by Magessan Varatharaja