Orcel aims to construct a powerful European banking conglomerate
Rewritten Article:
Unicredit's Persistent Pursuit of BPM Takeover Amidst Stiffe Resistance
By Gerhard Bläske, Milan
In a bold move, Unicredit CEO Andrea Orcel continues to press forward with his expansion dreams in the Italian home market, despite boosting his stake in Germany's second-largest private bank, Commerzbank. The increased stake of roughly 28% shows no signs of affecting the public exchange offer for Banco BPM, according to Unicredit's recent announcement. With the acquisition of both Commerzbank and Banco BPM, Unicredit would seize the title of the largest bank in Europe and the Eurozone. Orcel has consistently emphasized the need for larger competitive European institutions that can hold their ground against American banking giants.
In a matter of days, Unicredit made its BPM offer of over €10 billion binding and sent it to the regulatory authorities. However, Banco BPM's management is adamantly opposed and has gone so far as to ask the Italian Securities and Exchange Commission (Consob) to intervene on behalf of shareholders and the market. Banco BPM CEO, Giuseppe Castagna, expresses his concerns about the lack of premium for shareholders in Unicredit's offer, which is also evident in the market's response.
Ramping up the Antagonism
Banco BPM is digging its heels in against Unicredit, to the point of requesting the declaration of the takeover offer as invalid. The offer puts a strain on BPM's flexibility in regards to its planned acquisition of Anima. Moreover, shareholders have the right to be informed of potential developments, risks, and costs related to the Commerzbank transaction and possible divestment of assets, according to Castagna.
Lackluster BPM Offer
Unicredit's offer provides a premium of merely 0.5% over the initial Banco BPM share price. Since then, the share price has skyrocketed. Many experts believe that the offer is a non-starter without a significant price hike.
Italian Prime Minister Giorgia Meloni commented on the increased stake in Commerzbank, stating that the free market will determine its fate. However, this contradicts the government's involvement in other cases, like Unicredit's takeover bid for Italy's third-largest bank, Banco BPM. Here, Rome has shown support, preferring an alliance between BPM and the partially state-owned bank, Monte dei Paschi di Siena.
The Italian government has granted approval to BPM's largest shareholder, Crédit Agricole, to increase its stake to 15%, with plans to elevate it to up to 20%. Meanwhile, the French could potentially act as a savior for BPM but may have their own interests, as they collaborate with Unicredit in areas such as asset management.
"Substantial Value"
Unicredit maintains that the increased stake in the German institution underscores the belief in the vast potential worth in Commerzbank. They also express their faith in Germany, its industries, and society, as well as the importance of a robust banking sector for Germany's economic growth.
In Orcel's quest for significant synergies through the takeover of Commerzbank, the labor union Verdi voices concerns about impending mass layoffs, pointing to the precedent set by the 2005 acquisition of HVB. Some experts also caution that German taxpayers may be left to shoulder the risks of Unicredit's engagement in Italian government bonds.
There's a substantial amount of opposition in Germany towards a takeover from the current federal government, Commerzbank's management, and trade unions. Berlin appears to be signaling its stance with the reported imminent appointment of former Bundesbank Vice President and ECB Director Sabine Lautenschläger. Despite the federal government retaining a 12% stake in Commerzbank, they have no immediate plans to sell more shares.
Subject to the European Central Bank's approval, Unicredit with a 30% stake in Commerzbank would hold significant influence, for example, in annual general meetings. Orcel's latest move seems surprising, considering his previous declarations that he saw no immediate opportunities to progress at Commerzbank and intended to wait for the formation of a new federal government, which could extend into the autumn.
Despite strengthening its position in Commerzbank to 28%, Unicredit's CEO Orcel still pursues plans to acquire Italy's third-largest bank, Banco BPM. Both ventures face formidable challenges. If successful, Unicredit would emerge as the largest bank in the Eurozone.
Enrichment Data:
Overall:
UniCredit's attempted takeover of Banco BPM has encountered significant obstacles, with Banco BPM's management firmly turning down the bid and having minimal shareholder support, accompanied by opposition within Germany.
Current Status of the Takeover Attempt
- Rejection by Banco BPM: Banco BPM's board has unequivocally rejected UniCredit's takeover offer, finding it undervalued and not in the best interest of shareholders. The proposed bid was worth approximately €13 billion ($14.8 billion), which included a 9% discount on Banco BPM's valuation, valuation which the BPM board deemed unacceptable. As a result, the board advised shareholders to reject the deal.
- Low Shareholder Take-up: As of early May 2025, the number of Banco BPM shares tendered to UniCredit was insignificant, with less than 0.012% of the shares tendered. This lack of enthusiasm or support from shareholders is evident.
- Government and Regulatory Factors: UniCredit is reportedly in discussions with the Italian government in Rome regarding conditions tied to the BPM offer. It is suggested that regulatory and political considerations are impacting the outcome or UniCredit's strategy moving forward.
- Resistance in Germany: Although much of the opposition comes internally from Banco BPM and its shareholders, there is also a noted degree of resistance in Germany. This is likely due to broader European banking market concerns and competitive or regulatory challenges that may arise from the cross-border implications of the takeover attempt.
Potential Implications
- For Banco BPM: The rejection of the offer secures Banco BPM's autonomy for the time being. The board's stance safeguards the current valuation and shareholder value but may also trigger UniCredit or other suitors to table improved bids or consider alternative strategies. The opposition highlights the importance BPM places on long-term value over immediate premiums.
- For UniCredit: UniCredit faces a complex path to capture control of Banco BPM. The low shareholder acceptance and outright rejection may force UniCredit to improve their offer or engage in negotiations with stakeholders, including government authorities, to address the concerns. The opposition may prolong or even impede the acquisition, potentially affecting UniCredit's plans to consolidate its presence in the Italian banking sector.
- Broader Market Impact: A prolonged takeover fight might create uncertainty in the Italian banking market, influencing investor sentiment. The strong opposition—domestically from Banco BPM and globally in Germany—illustrates complexities in cross-border bank consolidations in Europe, potentially impacting regulatory policies and future M&A activities.
- Unicredit's continuous effort to acquire Banco BPM, despite the rejection by Banco BPM's board and minimal shareholder support, along with opposition within Germany, demonstrates Unicredit's commitment to growing its presence in the Italian banking sector.
- In the face of Banco BPM's rejection and lack of enthusiasm from shareholders, Unicredit may need to reconsider their strategy, perhaps by improving their offer or negotiating with stakeholders, including government authorities, to address the concerns and eventually capture control of Banco BPM.
