Italy’s Unicredit Bank to Acquire Banco BPM

In another mega merger in Italy’s baking sector, the Board of Directors of UniCredit S.p.A. on Monday approved the acquisition of Banco BPM S.p.A., for $10.6 billion implying an offer price at $6.98 per share based on official prices as of 22 November 2024.

The offer remains subject to the receipt of the relevant regulatory authorisations and to the conditions, which will be set out further in the offer document and the deal is expected to close in June 2025 with full integration completed within a year thereafter with the majority of synergies realized within 24 months.

The offer seeks to strengthen UniCredit’s competitive position in Italy, one of the Group’s core markets, creating an even stronger Number 2 bank in an attractive market generating significant long term value for all stakeholders and for Italy.

The complementary nature of the businesses across both geographies and client segments together with UniCredit’s demonstrated execution capability means the Board considers the combination to represent a manageable execution risk.

If completed, the transaction will enable UniCredit to further accelerate the delivery of sustainable long term quality growth. It will substantially reinforce its position in Italy while at the same time ensuring investment in Banco BPM’s own client franchise, distribution channels and technology, UniCredit said.

The benefit of a combination is evident from a geographic standpoint, reinforcing UniCredit’s presence in its home market that will account for 50% of the combined Group net profit. For clients it would deliver strengthened and highly complementary product factories, available for both entities, more seamlessly integrated distribution channels, and a more efficient organisation supporting them.

This offer will provide the Banco PBM’s clients with direct access to a truly international franchise and to a more comprehensive and attractive offering of products, tailored solutions and services for individuals, corporates and SMEs.

The deal will also strengthen and aid the Groups’ commitment to supporting the growth of the Italian economy, helping it develop and supporting the growth and internationalisation of Italian industrial groups.

Strengthening Italy’s Banking Sector

The merger will strengthen the Italian banking system as it brings together two significant Italian banks, creating the capability to support the whole economic system and increasing competitiveness in the Italian market.

It will also further encourage much needed consolidation within the European banking arena especially important at an uncertain geopolitical time.

Once all clearances are secured, UniCredit’s commitment to delivering sustainable best in class long term shareholder distribution and maintaining a solid capital ratio of at least 13% will continue, UniCredit said.

The combined Group’s profitability will benefit from estimated run-rate pre-tax cost synergies of around Euro 900 million per year (equal to around 14% of the 2023 combined Group Italian cost base), to be delivered through measures aimed at improving the combined Group’s operational efficiency, including through training and re-skilling programs.

This is in addition to estimated run-rate pre-tax revenue synergies of around $314.47 million per year to be delivered by strengthening the product service offering, fully integrating Banco BPM product factories and enhancing technology.

In the context of the transaction, the Group currently envisages integration charges of around $2.1 billion gross of tax to be incurred during year one, and incremental loan loss provisions of at least $838.58 million gross of tax, allowing an improvement in the NPE and performing exposure coverage ratio of Banco BPM.

Historical Target

UniCredit CEO Andrea Orcel said that with this acquisition of one of their historical targets, the deal will reinforce UJniCredit’s position in Italy while further enhancing the value they can create for all their stakeholders in that market as well as the bank’s 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,” he added.

It may be recalled that Banco BPM has offered to buy out asset manager Anima Holding in a $1.68 billion on November 6, then a week later bought a 5% stake in Monte dei Paschi di Siena from the Italian government for $1.15 billion.