March 6, 2020 / 11:47 PM / in a month

Intesa Sanpaolo files UBI takeover offer document with market watchdog

MILAN (Reuters) - Italy’s top retail bank Intesa Sanpaolo (ISP.MI) said on Friday it had filed with market regulator Consob the offer prospectus for its unsolicited bid for smaller rival UBI Banca (UBI.MI).

Intesa last month unveiled a surprise all-paper takeover bid for UBI, offering 1.7 new Intesa share for each UBI share tendered to create the euro zone’s seventh-largest banking group with a focus on asset management and insurance.

Since then, Italy has been hit by Europe’s worst outbreak of coronavirus, which has killed almost 200 people in the past two weeks, wrecking havoc in financial markets and driving Italian banking shares down 25%.

When it was announced, just before midnight on Feb. 17, Intesa’s offer valued UBI shares at 4.254 euros each, a figure which the recent sell-off has lowered to 3.36 euros.

UBI shares closed down 5.3% on Friday at 3.159 euros.

The offer document filed on Friday will become public only after its approval, which is expected by mid-June after all the necessary green lights from relevant authorities, including Italy’s competition watchdog, which Intesa said it had also requested on Friday.

Intesa has said it expects to launch the exchange offer only towards the end of June.

Intesa Sanpaolo does not regard its offer as hostile but UBI’s board has given it the cold shoulder, saying the bank would assess also possible alternatives.

UBI, Italy’s fifth-biggest bank, is working with Credit Suisse and Goldman Sachs on possible defense moves, sources have said.

Two groups of local UBI shareholders holding roughly a combined 21% of bank’s capital have rejected the offer.

The main group, dubbed CAR, has said the bid is “hostile, unsolicited and not consistent with UBI Banca’s underlying values”.

A third group of Italian shareholders, holding 8.4% of UBI, has delayed its decision blaming the coronavirus emergency which is making it difficult to hold meetings.

A further rejection, which a source involved in the process said could not be ruled out, may complicate matters for Intesa.

Intesa has set a take-up threshold of two-thirds of UBI’s capital for the offer to be successful - though it reserves the right to lower it to 50% plus one share.

Intesa recently beefed up its team of advisers led by Mediobanca, hiring JP Morgan, Morgan Stanley, UBS and local broker Equita SIM.

Reporting by Valentina Za and Andrea Mandalà; Editing by Daniel Wallis

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