MILAN Italy's Unipol (UNPI.MI) took a step towards a complex merger to create the country's second-biggest insurer, as market regulator Consob signaled it would not require it to launch a costly tender bid for troubled peer Fondiaria-SAI FOSA.MI.
Unipol agreed in January to a deal brokered by investment bank Mediobanca (MDBI.MI) to rescue loss-making Fondiaria in a four-way merger involving Fondiaria's parent Premafin PRAI.MI and its unit Milano Assicurazioni ADMI.MI.
The plan was subject to Consob waiving Unipol from an obligation to launch tender bids for Fondiaria, Premafin and Milano Assicurazioni, which have a combined market capitalization of around 900 million euros ($1.2 billion).
Unipol said on Tuesday that Consob saw no need for a mandatory tender bid for Fondiaria as long as insurance regulator ISVAP agreed the merger was necessary, which it is expected to.
Consob also set conditions to waive the need for a bid for Premafin, but said more information was needed for a ruling on Milano Assicurazioni, Unipol said.
Shares in all the four companies involved in the plan rose sharply. At 0935 GMT, Fondiaria shares were up 8.5 percent and Premafin's up 17.7 percent, while Milano Assicurazioni's and Unipol's were both up over 3 percent.
On Monday, Premafin delayed a shareholder meeting to June 12 to buy time as the parties struggle to reach an agreement on merger terms.
"Besides the Consob's decision, the market is also speculating on the final share swap ratios for the merger," a broker said.
Fondiaria faces a rival bid from two private equity funds.
Conditions set by Consob to waive the need for a bid for Premafin are expected to put pressure on the Ligresti family, which controls the group.
Consob wants Premafin's leading shareholders to drop their rights to withdraw from the merger in exchange for cash. They also want a previous deal with Unipol, which waived their responsibilities in connection to roles held in the company, to be cancelled.
($1 = 0.7832 euros)
(Reporting by Danilo Masoni and Valentina Za; additional reporting by Giancarlo Navach; Editing by Mark Potter)