MILAN (Reuters) - Italy’s second-biggest bank Intesa Sanpaolo (ISP.MI) defended its takeover bid for UBI Banca (UBI.MI) which kicks off on Monday, saying its target had underestimated advantages for investors in rejecting it.
UBI’s board on Friday spurned the bid, which runs until July 28, saying it did not adequately reward its shareholders.
Intesa is offering 1.7 of its own shares for each UBI stock, valuing Italy’s fifth-largest bank at 3.5 billion euros ($4 billion), down from 4.9 billion when the bid was announced in mid-February, before COVID-19 hit Italy.
That compares with a market value of around 4 billion euros for UBI at the time.
Intesa said that, in assessing benefits for shareholders, UBI’s board should have taken into account not just 3.2 billion euros in expected net synergies from the deal but also 1.1 billion euros in incremental market value provided by the deal when it was first announced.
UBI said on Friday advisers Credit Suisse and Goldman Sachs had calculated a fair exchange ratio would have been 2.28 Intesa shares for each UBI stock.
Intesa says the deal answers regulatory calls for consolidation in Europe’s battered banking sector at a time when the pandemic fallout will further dent profitability.
“We see successful closure having more symbolic significance for the sector consolidation theme than for Intesa itself,” Jefferies said in a note.
UBI, which on Friday cut its profit goals and raised proposed dividend payments thanks to disposals, says it could play an active role in consolidation and would immediately seek a friendly merger if it remained independent.
UBI shares were up 2.6% at 3.15 euros at 0957 GMT, representing a 2.7% premium to the exchange ratio of 1.7 times, in a sign some in the market bet on Intesa improving its offer.
“Intesa could yet offer a small ‘sweetener’ but given we don’t think Intesa ‘needs’ to do this deal (and upside on current terms is somewhat limited), walking away would not be a material negative - we expect management to retain a disciplined approach,” Jefferies said.
($1 = 0.8859 euros)
Reporting by Valentina Za and Giulia Segreti; editing by Louise Heavens and Jason Neely