Il bank risk Italian faces from Tuesday, March 30, another important step. Part the takeover bid by Crédit Agricole Italia on Credito Valtellinese, an operation that could lead to the creation of the sixth Italian commercial bank by assets under management and the seventh group by number of customers and total assets, with a national market share of 5%. Here's everything you need to know about the takeover bid.
DETAILS OF THE TAKEOVER OFFER
Crédit Agricole's takeover bid on Credito Valtellinese was launched on 23 November. The offer evaluates Creval € 10,5 per share, with a premium of 21,4% with respect to the price of the Creval share on Friday 20 November (8,7 euro) and 53,9% with respect to the weighted average for the volumes traded of the prices recorded in the last six months prior to the offer publish. On 29 March, the price of Creval shares exceeded 12 euros per share. In any case, the maximum expected outlay is equal to 735 million euro. When the transaction is completed, Crédit Agricole Italia will initiate the merger by incorporation of Credito Valtellinese to integrate the two businesses.
WHO SUPPORTS THE TAKEOVER OFFER
The takeover bid, which he has already received the go-ahead from the ECB, Bank of Italy and Consob, to date can already count on one participation of more than 17 percent thanks to the participation in the offer of Crédit Agricole Assurances (9,85% of the capital), of the representative purchase and sale contracts already signed (equal to 2,45% of the capital) and of the participation in the offer of algebris, which holds 5,38% of Creval.
THE HEDGE FUNDS
Unlike what was decided by Algebris, ad wait for a raise, which in all probability will not arrive, are Alta Global, Hosking Partners, Petrus Advisers and the hedge fund Melqart Asset Management, owner of 4,8% of the capital. Along the same lines too Dgfd by the French entrepreneur Denis Dumont, who owns 6,15% of the capital. Although he did not explicitly comment on the takeover bid, in fact, Dumont filed a list for the renewal of the Creval board of directors, confirming the outgoing top management, starting with the CEO Luigi Lovaglio and the chairman Alessandro Trotter, and emphasizing his desire to give "continuity and stability to Governance".
THE FORECASTS OF CREDIT AGRICOLE ITALIA
Crédit Agricole Italia estimated at 1,04 billion the badwill generated by the acquisition by Creval, emphasizing that the figure may be revised downwards also in the light of possible new adjustments to credits. The French also estimated to get synergies for 86 million a year. L'Agricole, in fact, “has formulated a preliminary hypothesis of potential cost synergies, in the order of around 50 million (pre-tax), which it is assumed will take at least three years to achieve'. Added to these are the 36 million euro envisaged for revenue synergies, "which it is assumed will take at least four years to achieve". These figures, then, "are accompanied by the positive effects which, according to the preliminary hypotheses formulated by the bidder, could derive from the alignment of the issuer's cost of funding with the (lower) cost of funding of the Crédit Agricole group, estimated at 24 million pre-tax and always achievable in about three years”. However, these effects would be partially canceled "by the charges that could foreseeably derive from the alignment of the issuer's assets and liability management policies with those of the offeror and assumed for a recurring negative impact of at least 15 million".
According to what can be read in the offer document presented by CAI, the merger between the two banks could give rise to a group with over 1.200 branches and 2,8 million customers which will benefit from “a significant improvement in asset quality and financial solidity” able to better face the challenges of the present and the future. Under the geographical profile, the merger will lead to an increase in the critical mass and a strengthening of the presence in Northern Italy, where approximately 70% of the number of branches would be located. L'Agricole also foresees a doubling to 6% of the market share in Lombardy, a dimensional increase in Piedmont, Marche and Lazio, and access to new areas such as Sicily, Valle d'Aosta and Trentino.
“The Crédit Agricole Group and CreVal are already collaborating in a significant way today, given that Crédit Agricole Vita, the Italian subsidiary of the Crédit Agricole Group operating in the life insurance business, is the exclusive partner of CreVal in the life insurance business and that Crédit Agricole Assurance is the main shareholder of CreVal with a stake of approximately 9,8%”, underlines the group led by Maioli in the document. CAI also speaks of benefits for shareholders and customers, finally reassuring employees: "CAI does not envisage implementing redundancy plans, staff cuts or other organizational measures that could significantly affect the bank's business and the people who work there they work”, it is specified in the text.
CDA CREVAL: “PRICE NOT FAIR, BUT VALID MERGER
On the eve of the takeover bid, the Creval board of directors rejected the offer price, equal to € 10,5 per share, judging that "it is not reasonable from a financial point of view", while recognizing that "the integration of a solid and well-positioned commercial bank such as Creval with a banking group such as Agricole" could “generate benefits”.
According to the board of the Lombard institute, Crédit Agricole Italia would not have sufficiently valued some characteristics of the bank, such as "the high capital surplus" of over 400 million which "also creates the conditions for a potential strengthening of the dividend policy" when, after the pandemic, the ECB decides to abolish the limitations currently imposed on the sector. Factors not considered also include the "significant improvement in the risk profile", ahead of schedule, the improvement in operational efficiency with a sharp reduction in operating costs in 2020, and the boost in commercial activity.
Finally, as regards iThe prize offered by Crédit Agricole on the stock exchange values prior to the offer, the BoD defines it as insignificant, given that the Creval share was appreciating and even by itself "could have benefited from the positive trend recorded by the banking sector in general in the following period", in particular following at the birth of the Draghi government.
“We respect Credit Agricole, it's a huge bank and has a fantastic business model. Our insurance partnership works very well. We are not discussing the value of a potential industrial project” but the fact that “the price offered today does not recognize what Creval has done”, explained the managing director, Luigi Lovaglio.
However, not everyone thinks like the Creval board of directors and above all Crédit Agricole thinks differently, according to which the evaluation of the price indicated by the Lombard bank would be "potentially misleading" since it does not provide an "objective and reliable evaluation of the offer". The French have also asked to postpone to a later date the appointment of the board scheduled for the shareholders' meeting on April 19, two days before the end of the tender offer period. Creval let it be known that "the board of directors will examine the proposal".
(Last updated: Thursday 1st April 2021 at 11.05am).
