The French bank has proposed to Banco BPM “to engage in discussions concerning a merger” between the Italian lender and Credit Agricole’s Italian unit, it said in a statement Monday. 

“For the shareholders of Banco BPM, the proposal provides for an exchange ratio that reflects a 20% premium, in addition to the payment of an extraordinary dividend” of €1 billion to Banco BPM’s current shareholders, it said.

As a result of the proposed deal, Credit Agricole would increase from its current 29.6% stake in Banco BPM to approximately 45% of the new entity, it said. The transaction would be conditional on approval by Banco BPM’s shareholders and on exempting Credit Agricole from the obligation to launch a mandatory tender offer.

Banco BPM had a market capitalisation of about €20 billion (US$22 billion) at Friday’s close.

Credit Agricole is Banco BPM’s largest shareholder and it previously opposed an acquisition offer for the Italian bank from rival Monte Paschi.

The French lender has previously indicated it’s in favour of a tie-up between its local operations and Banco BPM.

The expected synergies are estimated at €800 million per year.

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