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ROME/MILAN, Feb 16 (Reuters) - Swedish debt collector Intrum is in exclusive talks to buy the bad loan arm of Cerved, the Italian financial group said on Sunday, signalling the first major consolidation move in an industry where growth is easing after a boom.
Intrum, which is Europe’s biggest loan recovery firm, had no comment.
Italy has become one of the world’s largest market for impaired bank debt thanks to some 200 billion euros ($222 billion) in problem loans shed by lenders in recent years in an effort to tackle the legacy of a harsh recession.
With sales now slowing and recoveries in some cases lagging initial projections, players are looking to grow in size to buttress profits by cutting costs.
Intrum first entered the Italian market at the end of 2017 when it agreed to buy debt recovery firm CAF. With a goal to become a leading player in the country, the following year it struck a 3.6 billion euro deal with bank Intesa Sanpaolo to set up a joint-venture, dubbed Intrum Italy.
In December Intrum Italy submitted a non-binding cash bid to buy the bad loan business Cerved had put up for sale after the early termination of a key contract with Monte dei Paschi di Siena and a failed attempt to expand further in Greece.
A source familiar with the matter said Intrum’s initial offer had valued the unit at 450 million euros, a price tag that was later raised ahead of a binding bid this month. Analysts had valued the division at up to 480-490 million euros.
Intrum faced competition from Credito Fondiario, an Italian bank and bad loan specialist controlled by U.S. investment firm Elliott.
Credito Fondiario submitted an alternative proposal to Cerved’s board, offering to merge its business into Cerved’s loan management unit with a view to eventually hiving off the division an list it, two sources have said.
Cerved would have owned 70% of the combined entity, the sources said.
Cerved, which also runs a credit information business, worked with Mediobanca on the sale of the unit while Credit Suisse advised its board on strategic options. (Reporting by Giselda Vagnoni in Rome and Valentina Za in Milan; Editing by David Gregorio)
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