The war in Ukraine, sanctions against Russia, hyper inflation are structurally changing the scenario in Europe. They caused Unicredit to lose more than 30% of capitalization since the beginning of the year due to its important presence in Moscow, thus removing the possibility of a potential move on Banco Bpm. And in the same period the latter gained over 11%. And so yesterday, late in the evening, with a surprise move, Credit Agricole announced that it had acquired a 9.18% stake in Banco Bpm’s capital through purchases on the market and a transaction with a leading financial institution. Credit Agricole which underlined “the strong appreciation” for the Milanese group led by CEO Giuseppe Castagna, highlighting the “positive prospects on the financial level”.
Today the stock of the Milanese group leaps by about 15% to 3.14 euros for a capitalization of 4.77 billion. The French bank then specified that the transaction consolidates the strategic and long-term relationship with the Italian group, with which Agricole holds the consumer credit joint venture Agos (39% Banco Bpm, 61% Credit Agricole). Credit Agricole has indicated the objective of expanding the horizon of strategic partnerships without however providing further details and has specified that it has not submitted the request to obtain the authorization to exceed the significance threshold of 10% in the Bank’s capital. The latter, in a separate note, specified that the purchase by the French had not been agreed in advance.
Today Equita confirms the buy rating on Banco Bpm and the target price of 3.7 euros. Analysts believe that the operation is positive for the Milanese group, given that on the one hand it proves the solidity of future prospects from an operational point of view, on the other it “revives the speculative appeal on the stock, in light of the presence of a quality industrial investor such as Credit Agricole, with a proven track-record in the M&A field “. According to the Milanese SIM, the probabilities of an M&A transaction are “high although the modalities and timing will remain to be evaluated”. The French bank is a company with a strong presence in Italy (it comes from the takeover bid on Creval), it has a good chance that “the operation will receive support from the Bank of Italy and the ECB”.
According to Keefe, Bruyette & Woods, the news undoubtedly raises speculative interest also on Anima (+ 8.3% to 4.31 euros), of which Banco Bpm is the main strategic partner, with a distribution contract until 2037 , assets under management for 45 billion and a penetration of the total funds of the bank’s customers of approximately 69%. The distribution agreement provides significant protections for Anima. Today Banco Bpm has 19.4% of the savings company, Poste 10.4%, 2.9% are treasury shares, while the free float is equal to 67.3% (data on the group portal).
In favor of the French, KBW writes, there are several factors. First, the tone of the Credit Agricole statement is not hostile. Secondly, the move will “dampen the speculation that Unicredit could try to acquire Banco Bpm in a takeover bid that risks becoming hostile with the risk that Credit Agricole will arrive as a white knight”. Third, and “indirectly a vote of confidence in the Italian banking system by a foreign institution that knows Italy well. And fourth, it could mean a return to previous speculations on a deal between Amundi and Anima” since the French are the main shareholders of Amundi and Banco Bpm di Anima. Amundi had previously denied (it was 2020) the speculation.
The analysts of Intesa Sanpaolo’s research department (rating buy, target price at 3.7 euros) believe that the move by the French, although not agreed with the counterparty, has “industrial sense” and recall that at the time Credit Agricole I first took over 5% of Creval to consolidate industrial synergies and then it rose to 9.8%. And only later did he move with a takeover bid.
The speculative appeal is high, since the French paid the Creval bid in cash. And in this sense it should be remembered that a year ago Credit Agricole had raised the offer price on the Lombard bank from 10.5 euros to 12.2 euros, incorporating a 41% premium compared to the official price of the shares as at 20 November 2020, the last trading day preceding the announcement of the takeover bid. A € 0.30 bonus was added to this upon reaching the 90% threshold.
Although the stock has been positive since the beginning of the year, Banco Bpm trades at a tangible price / capital ratio of only 0.35 times (the European average is approximately double) despite strong capital strength (Cet 1 ratio Fully Loaded in December 2021 of 13.4%) and a gross NPE ratio improving from 21% in 2017 to 5.6% at the end of last year. The meeting yesterday approved a dividend of 0.19 euros, equal to a 6% dividend yield at prices this morning. (All rights reserved)
