UniCredit withdraws offer for BPM after opposition from Meloni’s government

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

UniCredit has withdrawn its offer to buy smaller rival Banco BPM following opposition from Giorgia Meloni’s government, and just days after the European Commission had reprimanded Italy for its interference. 

In an interview with Italy’s Class CNBC on Wednesday, UniCredit’s chief executive Andrea Orcel said the bid had become “a drag” and the lender was now focused on German bank Commerzbank, in which it has built a 20 per cent equity stake.

His comments came as UniCredit raised its full-year outlook on the back of better than expected quarterly profits, handing a boost to Orcel hours after the bank revealed it had decided to pull its offer for BPM.

UniCredit said net profit, excluding one-off items, reached €2.9bn, up 8 per cent year on year and well above analysts’ forecasts. The bank now expects its full-year net profit to climb to about €10.5bn, compared with previous guidance of above €9.3bn.

The results were published after UniCredit said on Tuesday that it had decided to pull the BPM offer because conditions to enable the government’s so-called golden power authorisation had not been satisfied.

The golden power was originally introduced to vet foreign takeovers of strategic assets and gives Rome the right to impose requirements on transactions considered strategic for national security.

UniCredit referred to the deal’s failure as a “missed opportunity” for shareholders as well as the country’s broader economy. The Milanese lender is also tussling with the German government over its bid to buy Commerzbank.

Orcel on Tuesday put the withdrawal from the BPM deal down to “the continued uncertainty” around how the golden power rules were being applied. He said the rules did not benefit the bank or its shareholders.

The Italian government had imposed several conditions on the deal in May as part of the sweeping golden power, although an Italian court struck down two of them. The other two, including a demand that UniCredit exit Russia within nine months of the deal being completed, were confirmed.

UniCredit’s decision to withdraw has come after the European Commission said this month that the government’s interference contravened EU market rules. However, Rome showed no signs of backtracking on the conditions.

BPM urged UniCredit last week to clarify its intentions because the uncertainty over the deal was proving detrimental to its shareholders. 

UniCredit put forward a €10bn bid for BPM in November just weeks after it had built a substantial stake in Commerzbank. The offer, which took Rome by surprise, was immediately rejected by BPM. 

The Italian government was pursuing a merger between BPM and Monte dei Paschi di Siena, a bank it was forced to rescue in 2009 and nationalise almost a decade later. Rome is trying to create a third banking pillar to rival UniCredit and Intesa Sanpaolo. 

“The normal offer process has been impacted by the golden power provision insistently advocated for by the leadership of BPM, preventing UniCredit from engaging with BPM shareholders in the way that any normal offer process would allow,” the bank said in a statement. 

from Finance – Techyrack Hub https://ift.tt/kVnRObT
via IFTTT