Introduction
Italian bank UniCredit is set to receive conditional approval from the government in Rome for its planned takeover of smaller rival Banco BPM, according to sources familiar with the situation.
Context
The Italian government has the authority to block or impose conditions on corporate takeovers, particularly in strategic sectors like energy, telecommunications, and banking. Sources, who wished to remain anonymous due to the sensitive nature of the topic, indicated that the government is likely to approve the bid with certain unspecified requirements. The review process is expected to be completed by the end of April.
Developments
UniCredit, led by Andrea Orcel, announced on Wednesday its intention to launch a €14 billion all-share bid for Banco BPM following approval from market regulator Consob. In the offer document, UniCredit retains the option to decide by June 30 whether to waive conditions that would allow it to withdraw the offer. A source from UniCredit remarked that a decision regarding the transaction would align with the terms of the bid and would not occur before the end of June. While the sources did not reveal specifics about the potential government conditions, one mentioned that they are unlikely to pose significant hurdles. Previous reports suggest that the Italian government may request guarantees related to bank branches to ensure customer services and indirectly safeguard jobs. Economy Minister Giancarlo Giorgetti indicated last month that the government would exercise its intervention rights, suggesting a moderate approach.
Conclusion
UniCredit initially moved to acquire Banco BPM in late November, given its strategic position in Italy's affluent Lombardy region, where UniCredit is perceived to hold an insufficient market share. This takeover attempt disrupted government efforts to merge Banco BPM with state-supported Monte dei Paschi di Siena, aimed at forming a competitive entity against industry leaders UniCredit and Intesa Sanpaolo. MPS has since initiated an offer for Banco BPM. Despite the Italian government's concerns regarding Orcel's actions, there is limited room for intervention based on existing golden power legislation and the support for mergers from European Union bank regulators, which promotes free capital movement among member states.
