UniCredit CEO tells investors it has until March to improve Banco BPM bid

Milan — UniCredit has until March to consider improving its takeover bid for Banco BPM, according to a person who attended a virtual meeting hosted by UniCredit CEO Andrea Orcel.

UniCredit declined to comment.

With a possible move on Commerzbank on standby due to a political vacuum and a German rule that would force UniCredit to pay cash if it were to bid for the rest of Commerzbank within six months of crossing a 5% ownership threshold, Orcel is targeting smaller domestic peer Banco BPM.

Banco BPM has spurned UniCredit’s all-share offer, saying the 0.5% premium implicit in the stock exchange ratio is unusual and doesn’t reflect the benefits from a merger nor the acquisition of asset manager Anima Holding that Banco BPM is undertaking.

BPM has said UniCredit’s move hampers its bid for Anima because it prevents it from raising the price without seeking shareholder approval as required by takeover rules in Italy.

Orcel has acknowledged the price of the €10bn Banco BPM bid is close to the market price, adding that other bidders have added a cash element later on.

UniCredit must officially file Banco BPM offer’s document with market regulator Consob by mid-December.

At present the offer is non-binding. Once it goes to Consob, the minimum price will be set and any increase can be filed until March, Orcel told investors.

A second person who listened to the call said Orcel emphasised that IT procurement would play an important role in projected savings from the tie-up. UniCredit is re-internalising parts of its IT services and would be able to cut Banco BPM’s reliance on external IT suppliers, he said.

The March deadline is linked to UniCredit having called a shareholders meeting on April 10 to approve issuing the shares it needs to pay for the Banco BPM bid.

Orcel, who has set strict criteria for any mergers & acquisitions, has said in particular he wants to keep the dividend per share “trajectory” broadly unchanged despite the issuance of new shares to finance a deal.

Having restructured under his predecessor and maximised capital generation under Orcel since 2021 as higher rates drove profits to record levels, UniCredit has €6.5bn cash in excess of self-set minimum capital thresholds it can use to fund its M&A strategy and reward shareholders.

UniCredit's bid implies a 10% discount to Banco BPM’s closing price on Wednesday, equivalent to €1bn in value.

Reuters