Credit Agricole boosts Italy presence with successful Creval bid

Industry:    2021-04-24

Credit Agricole sealed its $1 billion takeover bid for Creval on Friday, in a move that strengthens its foothold in Italy’s consolidating banking sector – its biggest market outside France.

The acquisition of the regional lender allows the Italian arm of France’s no.2 bank to double its market share in the country’s wealthiest areas at a time when competition is intensifying.

The head of Credit Agricole Italia, Giampiero Maioli, said the deal was concluded “with great satisfaction” and that it represented “a success for everyone”.

“It is a further confirmation of the deep roots in the Italian territory and of the confidence of the Credit Agricole Group in our country,” he said in a statement.

The combined entity will control 5% of the domestic market and will rank as Italy’s sixth-largest bank, with two-thirds of branches concentrated in the industrial north.

After overcoming opposition from Creval and its leading investors by raising the initial price by 19%, Credit Agricole Italia secured 91.2% of its target’s capital, bourse data showed, confirming what a source had told Reuters.

On Thursday acceptance still stood at only around 48% of Creval’s capital, leaving in doubt whether the 90% threshold which paves the way for a residual buyout of Creval shares and their delisting could be surpassed.

The 855 million euro ($1.0 billion) offer was conditional on investors tendering at least two-thirds of Creval’s capital.

That would guarantee approval of extraordinary shareholder resolutions at meetings, including a decision to merge Creval into Credit Agricole Italia to maximise projected savings.

To boost take-up, Credit Agricole Italia in mid-April lifted the price by 16% to 12.2 euros, saying it would pay a further 0.30 euros a share only if more than 90% of the capital was tendered.

With acceptance still low, Credit Agricole Italia on Tuesday waived the 90% threshold and set the final price at 12.5 euros, while extending the offer through Friday.

That won over leading Creval investors, including French businessman Denis Dumont and investment funds Alta Global, Hosking Partners and Petrus Advisers.

The final price is still below a range of 12.95 euros to 22.70 euros, which Creval’s board had indicated as fair based on assessments by advisers Mediobanca and BofA Securities.

Creval has been preparing for a merger since 2018, when it raised 700 million euros in cash from investors – eight times its market value at the time – to clean up its balance sheet.

Credit Agricole Italia has estimated the combination with Creval could yield savings and other benefits worth in total 130 million euros a year.

Credit Agricole entered Italian retail banking in 2007, buying two northern banks and adding three small failing banks a decade later, while its asset manager Amundi bought rival Pioneer from UniCredit for 3.6 billion euros.

Its latest move comes after Intesa last year snatched rival UBI in an unsolicited takeover to create a national champion with a fifth of the banking market.

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