UniCredit CEO Defends $10.5 Billion Banco BPM Acquisition Bid as Binding Offer is Filed

UniCredit CEO Andrea Orcel has reiterated that the bank’s $10.5 billion bid for Banco BPM, officially filed on December 13 with Italy’s market regulator, is fair and adequate. The all-share offer, initially announced on November 25, is now binding, with a price floor set. UniCredit has also sought regulatory approval from the relevant authorities to move forward with the acquisition.

The offer is valued at 10 billion euros ($10.5 billion) and will be executed via an exchange ratio offering Banco BPM shareholders 175 newly issued UniCredit shares for every 1,000 Banco BPM shares they own. This equates to a 0.5% premium above Banco BPM’s stock price prior to the bid’s announcement. Shares of Banco BPM closed at €7.846 on Friday, well above the €6.657 per share proposed in the offer, indicating that investors are expecting the deal’s terms to be improved.

Orcel, a veteran in the field of mergers and acquisitions, expressed confidence in the fairness of the offer, stating that any deal must provide value to shareholders, ensuring it would yield a return superior to a share buyback program. He added that UniCredit aims for a return of at least 15% from any merger or acquisition.

While the bid is all-share, Orcel suggested that additional cash may be considered later, signaling that UniCredit may be willing to sweeten the offer to facilitate the deal. He emphasized that UniCredit’s approach remains disciplined and that any transaction must align with the bank’s strategic goals and financial criteria.

Banco BPM has long been a target for UniCredit, but Orcel had previously held off on making a move, partly due to the high premium in Banco BPM’s share price. However, the acceleration of consolidation in the domestic banking sector has led him to pursue the deal now. Orcel also pointed out that Banco BPM investors would benefit more from holding UniCredit shares, citing UniCredit’s superior resilience, diversification, and a two-times higher total distribution yield going into a challenging economic year.

The current offer represents a 15% premium over Banco BPM’s share price before it launched a bid to acquire Anima Holding, a move that boosted the stock prices of both Banco BPM and Anima. Orcel emphasized that the terms of the offer, alongside its robust strategy, would remain unchanged unless new circumstances arise.

UniCredit has also opened a dialogue with Credit Agricole, Banco BPM’s largest shareholder, which has steadily increased its stake in Banco BPM. Credit Agricole now holds a nearly 15% stake and has applied to the European Central Bank to raise it further to 19.99%. These discussions are expected to focus on potential commercial partnerships between the banks.

“We are in continuous discussions with all relevant stakeholders,” Orcel said, highlighting the bank’s commitment to advancing the deal while balancing the interests of all parties involved.

This offer is set to reshape Italy’s banking landscape, with potential benefits for both UniCredit and Banco BPM’s investors, as the deal progresses toward completion.