MILAN – UniCredit, the Italian banking giant led by CEO Andrea Orcel, is making bold moves to acquire Banco BPM, Italy's third-largest lender, following competitive strategic shifts by Banco BPM itself. Multiple sources indicate Orcel has been laying the groundwork for this acquisition over the past few years, and though his plans were nearly ready to execute, the recent rapid actions taken by Banco BPM have forced UniCredit to act sooner than anticipated.
Just as Banco BPM stirred the Italian financial waters with its announcement of two significant moves – acquiring 5% of the struggling Monte dei Paschi di Siena (MPS) and proposing a €1.6 billion bid to gain control of Anima Holding – UniCredit found itself compelled to make its own play. This bold maneuver by Banco BPM not only increased its own share price by 12% but also set the stage for potential alliances with other banks, which is precisely what Orcel has been wary of.
Orcel, who was initially eyeing the opportunity to orchestrate the ideal moment for his offer, instead had to rush forward with his pitch for Banco BPM, offering what he considered to be a 15% premium over their earlier share prices. The urgency is palpable; with the Commerzbank acquisition stalling, many are beginning to question Orcel’s strategy. Just three days after expressing frustration over his stalled M&A efforts during a London conference, UniCredit swiftly announced its buyout offer to Banco BPM shareholders.
The backdrop to this high-stakes acquisition saga is complex. Orcel has long appreciated Banco BPM’s stronghold in Lombardy, one of Italy's wealthiest regions, where UniCredit seeks to fortify its own presence. Yet, previous concerns over the valuation of Banco BPM shares had made Orcel hesitant. With BPM’s recent announcements causing its share values to soar, Orcel is now rumored to be considering restructuring his offer to include cash elements, aiming to appease shareholders and meet their rising expectations.
Observers like Stefano Caselli, dean of SDA Bocconi, have pointed out the increasing pressure on UniCredit to beef up its offer if it wants to contend for the acquisition. "The market is clearly communicating its disapproval of the current offer; as time goes on, BPM’s price will only become more expensive. Orcel needs to act decisively and demonstrate to shareholders why they would be benefiting more with UniCredit than BPM alone," he noted.
Further complicate matters for UniCredit is the political climate. Members of Italy’s conservative government have expressed discontent with Orcel’s bid. They favor creating strong domestic rivals to UniCredit, ideally through mergers like the one proposed between BPM and MPS. Orcel’s previous decision to bypass buying MPS from the state has created friction with certain circles, making his current pursuit even more challenging.
Credit Agricole, Banco BPM’s largest shareholder, has proven to be another obstacle. The French bank recently increased its stake to 15% and retains the option to climb to 19.99% without fully absorbing the bank. Sources suggest they have government support to maintain their close relationship with BPM, raising tensions as UniCredit moves forward.
Even with Orcel holding €6.5 billion cash reserves, the pressure mounts to make the deal sweet enough for BPM’s shareholders without overextending and compromising UniCredit’s standing. All this is compounded by political scrutiny: even though the government can't block Orcel's bid outright, approval processes under investment screening regulations could lead to delays, potentially tying up UniCredit longer than desired.
The stakes are high for each player. Orcel must navigate through competitive tensions within the financial sector, bolster investor confidence, and leap over bureaucratic hurdles, all of which intertwine. The battlefield Set amid shifting allegiances and tactics, this acquisition drama holds the potential not just for UniCredit’s future but for the broader Italian banking market. How Orcel negotiates this challenging terrain will be closely monitored as billions are at play and the dynamics of Italy's banking sector could shift decisively depending on the outcome of these high-stakes moves.
