Unicredit
Note: This is a daily stock update and the information stands true as of 25/11/24, 09:00 CET.
Company Update:
Expert Opinion:
The bid on Banco BPM makes sense from a financial and strategic standpoint. However, the absence of premium on the takeover bid is weird, even though the resent banco BPM share price suggest some speculative premium was included in the share price. More importantly, the acquisition spree from Unicredit is worrying. Most M&A deals are value destructive and take a massive amount of time from the management to generate a smooth and efficient integration. Now Unicredit management has to focus on running its day to day business but also managing the bid on Banco BPM and the Commerzbank stake even if a takeover on the German bank will take a long time. While I don’t doubt the strategic pertinence of such moves, there is a risk that these are bigger than Mr Orcel’s teams can chew. I would be cautious on the name following the fantastic share price performance.
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Company Update:
Unicredit announced a takeover bid on Banco BPM in an all share exchange (175 newly issued shares for 1000 existing Banco BPM shares) for a total consideration of €10bn, ie at roughly the last price (€6.657).
Banco BPM has c €200bn of assets ahs long been considered a potential takeover target for Unicredit notably to take market share in the Lombardi region.
The deal would generate integration costs of €2bn year one.
Unicredit also reiterated its interest for Commerzbank.
Expert Opinion:
The bid on Banco BPM makes sense from a financial and strategic standpoint. However, the absence of premium on the takeover bid is weird, even though the resent banco BPM share price suggest some speculative premium was included in the share price. More importantly, the acquisition spree from Unicredit is worrying. Most M&A deals are value destructive and take a massive amount of time from the management to generate a smooth and efficient integration. Now Unicredit management has to focus on running its day to day business but also managing the bid on Banco BPM and the Commerzbank stake even if a takeover on the German bank will take a long time. While I don’t doubt the strategic pertinence of such moves, there is a risk that these are bigger than Mr Orcel’s teams can chew. I would be cautious on the name following the fantastic share price performance.
For daily updates, subscribe to our newsletter and for detailed daily updates, reach out to us at sales@alphavalue.eu
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