Intesa Sanpaolos spat with rival UBI Banca resembles a scenario for an opera buffa. Crazy story twists are layering over one another, like voices in another of Rossinis turbocharged quintets. Hostile offers aren't supposed to work in banking. Italys biggest loan provider established one anyhow. Just bidders tend to be meant to invoke material adverse modification clauses. Which includes not stopped target UBI Banca from attempting it.
Rivalries operate deep in European banking. Consolidation is consistently talked about but rarely achieved.
Intesa made its audacious all-share strategy given that pandemic hit areas in February. It valued UBI at 4.9bn. At todays prices the mark could be really worth around 3bn. Intesa stock has dropped two-fifths, in line with the Stoxx 600 finance companies index, UBI by lower than this.
The influence of coronavirus on Italy definitely appears like an adverse change. But even acquirers have experienced restricted success in using MAC conditions to void bids. UBIs mooted legal challenge reflects disappointment. The bank, with possessions of 126bn compared to 848bn for Intesa, cannot at this time mount a public defence under Italian bid rules. A court ruling that provide had been invalid would change that.
regional opposition is an even more intractable issue for Intesa, though. That is embodied by automobile, a grouping of shareholders, many from UBIs Lombardy pridelands. They hold some 18 % of UBI and borrowers one of them must worry harder loan terms. Intesa requires the help of two-thirds associated with the shareholder base to integrate UBI making price cuts well worth billions. Normally it takes hands length control in just over half the shares.
that will simply take neurological and an increased provide. Intesa boss Carlo Messina is capable of both.
History isn't on their part, nevertheless. In European countries, financial institutions usually merge because one of those is certainly going bust. Only financial stress trumps political and antitrust objections. The complexity of a comic opera distils to an easy message: true love conquers all. In European banking, multi-faceted quote stand-offs have actually a straightforward takeaway too: dont stone the ship.
Lex suggests the FTs research publication, a curated briefing from the world of mergers and purchases. View here to join up.