UniCredit has issued a voluntary public exchange offer to acquire all ordinary shares of Italian retail and corporate banking conglomerate Banco BPM in an all-stock deal valued at approximately €10.1bn.
Under the terms of the offer, shareholders of Banco BPM would receive 0.175 newly issued UniCredit shares for each existing Banco BPM share. This represents an offer price of €6.66 per share.
The consideration marks a premium of 15% on Banco BPM’s undisturbed share price as of 6 November 2024.
Approved by UniCredit’s board of directors, the proposed offer seeks to strengthen the bank’s position in Italy, which is one of its key markets.
Through the potential deal, UniCredit aims to solidify its position as the second-largest bank in Italy. The combined entity is also expected to contribute around 50% of UniCredit’s net profit.
In addition, the combined entity is projected to achieve annual cost synergies of approximately €900m, equivalent to 14% of the combined group’s 2023 Italian cost base.
Besides, annual revenue synergies of €300m are anticipated from an enhanced product and service offering through the integration of Banco BPM’s product factories, and technological upgrades.
The transaction is also anticipated to help Banco BPM shareholders to gain access to the financial and capital stability of the newly combined group. Clients are expected to benefit from expanded product offerings, digital solutions, and increased lending capacity.
Furthermore, the employees across both organisations would have opportunities for professional development within a larger European banking group with operations in 13 markets.
According to UniCredit, the transaction would support Italy’s economic growth by fostering the internationalisation of local businesses and reinforcing the competitiveness of the Italian banking system.
UniCredit also expects the proposed merger to deliver high single-digit earnings per share (EPS) accretion within two years of settlement while maintaining a robust capital ratio of at least 13%.
The deal is independent of UniCredit’s investment in Commerzbank, said the company.
UniCredit CEO Andrea Orcel said: “With this acquisition of one of our historical targets, we reinforce our position in Italy while further enhancing the value we can create for all our stakeholders in that market as well as our shareholders.
“Europe needs stronger, bigger banks to help it develop its economy and help it compete against the other major economic blocs. Thanks to the work that has been done over the past three years, UniCredit is now well positioned to also answer that challenge.”
UniCredit expects to incur €2bn in integration charges during the first year, alongside €800m in incremental loan loss provisions to improve non-performing and performing exposure coverage for Banco BPM.
Subject to regulatory approvals and other conditions, the exchange offer is expected to be completed by June 2025, with the full integration of Banco BPM anticipated within 12 months thereafter.
UniCredit plans to realise most of the synergies within 24 months of the merger’s completion.
