This morning Piazza Affari lost 3.6% due to the danger that Russia could soon invade Ukraine, and the warning of the US president, Joe Biden. And the two protagonists of last Friday in Piazza Affari, Unicredit and Banco Bpm, lead the price reductions, which are however very heavy on all banks. Unicredit sells 6% to € 14.79, also weighed down by the fact that, as the first foreign institution for assets in Russia, it risks being involved in the EU-US sanctions on Moscow. The second loses 6.9% to 3.31 euros after running for almost 10% during the last session on press rumors according to which the CEO Andrea Orcel, head of Unicredit, has a plan to take over Banco Bpm , led by CEO Giuseppe Castagna, with a possible takeover bid last weekend, which did not materialize.
In the meantime, Unicredit has specified to continue “to evaluate all the strategic options available”, in fact not explicitly denying the rumors. According to Equita Sim, it is not clear at what point the evaluations were. Any move on Banco Bpm should be a hostile takeover bid, having not been pre-agreed with the management of the prey bank. According to some reconstructions, which hypothesize the leak of news attributable to government sources, an aggregation between the two groups could be “opposed on the political front, also in light of the lack of agreement between the Mef and Unicredit on the Mps dossier and on which both Unicredit and Banco Bpm remain potential interlocutors “, writes Equita. According to Il Messaggero, the first to talk about takeover bid, the ceo of Banco Bpm, Castagna, would have had new contacts the
Credit Agricole is partner of the Milanese bank in the Agos consumer credit joint venture (39% Banco Bpm – 61% Credit Agricole), as well as having invested 300 million in the acquisition of Profamily from the Milanese group in 2019 (sale of the fifth). Considering the partnerships in progress (Agos) and the complementarity of the networks, “the hypothesis of a business combination would certainly make sense from an industrial point of view”, writes Equita. This would in fact create the second Italian banking group with a national market share of over 12% in terms of branches (Banco Bpm 8% and Credit Agricole 4%) ahead of Unicredit, with a strong presence in northern Italy around 16% and above all in Lombardy, where it would join Intesa Sanpaolo with a 20% stake.
However, the analysts of the Milanese SIM add that “it would still remain to be assessed how a transaction of this type could be structured and whether or not it could provide for a premium for Banco Bpm shareholders, an eventuality that would instead be guaranteed by a takeover bid. hostile by Unicredit “. Kbw analysts today raise the target price post accounts of the two banks (both market perform, the target price on Banco Bpm goes from 3 to 3.55 euros, on Unicredit from 15.4 to 16 euros) and analyze how the possible combination of the two realities in such a way as to guarantee a solid return for Unicredit shareholders and a bonus for those of Banco Bpm. According to the specialists, the meld should take place card against card for an acquisition value of 6,
As in the case of Equita, Kbw also calculates an acquisition premium of 30%, synergies equivalent to 30% of Banco Bpm’s cost base and approximately € 2 billion of one-off costs for integration. The model shows an increase in eps (earnings per share) pro forma of 12% and the ability of the new group that would be created to pay a return on capital of over 10% per year in 2023/24 while maintaining the Cet 1 ratio pro forma above 13.5%. Unicredit earnings per share as of 2024 would go from 1.88 to 2.11 euros per share. The new group could pay 2.195 billion euros in dividends in 2024 and carry out 3 billion buybacks, for a total capital return yield of 13.4%. The model does not take into account a possible rate hike in the Eurozone.
According to Intesa Sanpaolo analysts, through the integration of Banco Bpm, Unicredit would increase its market share in Italy from 11% to 19%, reaching 22% in the North-East (from the current 9%) and strengthening the its position in Lombardy (from 7% to 22%). The overlaps would be limited to Veneto (where the combined market share would reach 25%), Molise (28%) and Sicily (27%). Thanks to the “significant badwill, considering that Banco Bpm is trading at a price / book value (P / TBV) ratio of 0.5 times and estimated gross synergies of € 0.8 billion”, Intesa believes that Cet 1 ratio of the new group would remain close to 14%, for almost 500 basis points above the minimum Srep requirements required by the ECB. The fair value on Banco Bpm for analysts in this case is 3, € 7 per share and excludes an M&A premium. Intesa therefore provides that any offer on the Milanese bank should be made with a premium starting from this value. The target price on Unicredit is € 16.9, € 3.55 on Banco Bpm. (All rights reserved)
