UniCredit, Italy's second-largest bank, has received authorization from the European Central Bank for its €14 billion all-share offer to acquire Banco BPM.
This bid is among several hostile takeovers currently shaking the Italian banking sector, which, following a painful cleanup after the 2008-2012 crisis, has recently reported record profits driven by high interest rates.
UniCredit announced that its board would approve the share issue to fund the acquisition, following shareholder authorization given on Friday. The Italian market regulator, Consob, is expected to approve the offer document in the coming week, which is the final step before UniCredit can launch a tender. However, the bank is likely to wait about a month before proceeding, according to sources familiar with the process.
UniCredit CEO Andrea Orcel, an experienced dealmaker with stakes in Germany's Commerzbank and Italian insurer Generali, has emphasized that he will not jeopardize shareholder returns in pursuing a merger.
UniCredit initially bid for Banco BPM in November, shortly after Banco BPM announced plans to acquire fund manager Anima Holding. The €1.8 billion Anima acquisition became more expensive for Banco BPM this week due to the potential loss of favorable capital rules that would have allowed additional dividends.
Despite challenges, Banco BPM had received prior shareholder approval to move forward with the Anima investment, even without these benefits. On Thursday, Banco BPM confirmed its intention to proceed regardless.
UniCredit maintains the right to withdraw its bid for Banco BPM if the Danish Compromise benefits are not realized. The bank has reiterated its commitment to closely monitoring the impact on Banco BPM's profitability and capital levels before making further decisions. On Friday, it argued that the difficulties surrounding the Anima acquisition justified its offer of a near-zero premium to Banco BPM's shareholders.