July 16, 2020 / 4:12 PM / a month ago

Intesa gains Italy's antitrust approval for UBI deal

MILAN (Reuters) - Italy’s Intesa Sanpaolo (ISP.MI) on Thursday secured antitrust approval for its $4 billion takeover bid for rival UBI Banca (UBI.MI), overcoming a major hurdle to one of Europe’s biggest banking mergers in a decade.

FILE PHOTO: The headquarter of UBI bank is seen in Brescia, Italy, March 9, 2016. REUTERS/Alessandro Bianchi

The antitrust body said a pledge by Italy’s second biggest bank to sell more than 500 branches was enough to address concerns the acquisition would strengthen Intesa’s dominant position in several local markets.

“This is a fundamental milestone,” Intesa CEO Carlo Messina said in a note. “UBI shareholders now have all of the essential information needed to evaluate our offer and make their choice.”

To win antitrust approval, Intesa agreed to sell 532 branches to BPER Banca (EMII.MI) if the bid goes through, expanding an initial accord to sell 400-500 branches.

It has also promised to sell another 17 branches to a different bank within nine months if necessary.

The regulator did not disclose the deadline for the disposals. It said Intesa had to be ready to sell its own branches if it couldn’t sell UBI branches.

Intesa said on Thursday it would comply with all the antitrust demands, and considered fulfilled an antitrust condition it had posed for the bid to be valid.

On July 6 Intesa formally launched an offer to exchange 1.7 newly-issued Intesa shares for each UBI stock, targeting Italy’s healthiest second-tier bank in an effort to drive profits through cost cuts.

As of Thursday, take-up stood at 3% of UBI’s capital. The offer runs until July 28 and shareholders are expected to wait until the very last few days to decide.

UBI has rejected the bid as inadequate, saying it does not reflect its “fundamental value” and that Intesa’s dominance would turn the country’s banking landscape into “an anomaly”.

UBI has argued Intesa’s move is aimed solely at taking out a competitor that could have led long-expected consolidation among mid-sized Italian banks.

The antitrust authority, however, said UBI’s M&A plans were at a very preliminary stage and no board discussion had taken place. Other players, such an enlarged BPER, could now play a similar role to UBI’s, the regulator said.

A take-up of 50% of UBI’s capital plus one share is necessary for the bid to succeed but acceptance of 66.7% would guarantee Intesa controls extraordinary shareholder resolutions.

Low take-up may complicate Intesa’s plan for branch disposals, which would mostly be UBI’s, because minority shareholders may challenge the move if Intesa lacked the necessary majority to incorporate UBI.

Editing by James Mackenzie and Peter Graff

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