UniCredit may improve its bid for Banco BPM by including a cash component in its all-stock proposal to mitigate interest rate exposure. Analysts highlight potential challenges in integrating both Commerzbank and Banco BPM.
Analysts say that UniCredit could sweeten its spurned all-stock proposal to acquire Italian domestic peer Banco BPM by tacking on a cash component.
Amid resistance from the German government — and turbulence in Chancellor Olaf Scholz's ruling coalition — UniCredit also last month turned its eye to Banco BPM, with aAlong the way, Orcel drew frowns from the Italian administration, with Economy Minister Giancarlo Giorgetti warning that"the safest way to lose a war is engaging on two fronts,"
However, he warned of"limited" room to do so."Think more than 10% , you are probably going to dilute shareholder earnings." Both Scholtz and Filippo Alloatti, senior credit analyst at Federated Hermes, said that UniCredit could sweeten the proposition by tacking on a cash component. Critically, Scholtz noted, UniCredit's offer"puts BPM into a difficult position," triggering a passivity rule that impedes it from any action that might hinder the bid without shareholder approval — and could stifle Banco BPM's own early-November ambitionsA consolidation offensive could be UniCredit's best defense in an environment of easing interest rates.
Approaching Banco BPM, KBW Analyst Hugo Cruz told CNBC in emailed comments, also has the"added value" of signaling to German shareholders that UniCredit has other M&A options available to it. He nevertheless stressed that the domestic acquisition bid is likely"mainly a reaction to the acceleration of the consolidation process in the Italian banking system," triggered by Banco BPM's acquisition of its Monte dei Paschi interest.
Unicredit Banco BPM Commerzbank Interest Rate Exposure Acquisition Andrea Orcel
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