Banco BPM rejects UniCredit's $10.5 billion takeover bid due to concerns

Italy's Banco BPM rejected an unsolicited takeover bid from rival UniCredit, stating that the $10.5 billion offer does not accurately represent its current profitability and potential for future value creation. The offer made by UniCredit on November 25, 2024, was characterized as surprising and delivered under unusual terms according to Banco BPM's board of directors. They also expressed concerns that a rapid merger could undermine their legal autonomy and disrupt their strategic expansion plans, particularly in Germany. This takeover attempt comes shortly after UniCredit's previous ambitions to merge with the German bank Commerzbank, which faced significant opposition from the German government. The Banco BPM board stressed that the takeover bid introduces uncertainty regarding their operational plans, especially as they aim to solidify their position in more economically dynamic regions within Italy and the Eurozone. They believe the offer represents a risk of diluting their current geographic footprint rather than enhancing it through effective consolidation. UniCredit's CEO, Andrea Orcel, referred to Banco BPM as a "historical target" for potential mergers, recalling past interests that the organization had regarding collaboration or merger discussions in 2022. Moreover, the UniCredit shares remained stable following the announcement, reflecting the market's cautious stance regarding the acquisition's prospects. The Italian government’s reaction was also tepid, indicating that they prefer UniCredit to focus on its impending plans with Commerzbank, for which approval from the European Central Bank is still awaited. The competitive landscape in Italy’s banking sector is shifting, with Banco BPM's recent acquisition of a 5% stake in Monte dei Paschi further indicating their intent to grow independently amid consolidation attempts. In light of these developments, it appears that the ongoing negotiations and mergers within the European banking landscape can significantly influence the operations of national banks. As regulators begin to assess these takeover attempts, the focus on legal autonomy and the implications of potential mergers will play a crucial role in shaping the banking sector's future in Italy and beyond.