Credit Agricole Urged to Raise Creval Bid by Investor Alta

Alta Global, one of Credito Valtellinese SpA’s biggest shareholders, is urging Credit Agricole SA to increase its all cash-offer for the Italian lender, boosting the camp of shareholders pushing back against the current bid.

“At the current offer price, Alta Global will not adhere to the bid, ” Viatcheslav Pivovarov, the founder and CEO of the investment firm previously called Altera Capital, said in a phone interview. “At this stage, it doesn’t reflect Creval fair value.”

The fund, which owns more than 5% of the Italian lender, is joining smaller shareholders Hosking Partners and Petrus Advisers in rejecting Credit Agricole’s bid. In November, the French lender offered to buy Creval for about 737 million euros ($876 million), or 10.50 euros per share, as consolidation accelerates in European banking.

“We believe that the total M&A valuation per share for Creval is between 15 euros and 22 euros,” Pivovarov said.

The offer was 21.4% higher than Creval’s closing price on Nov. 20, the last trading day before Credit Agricole launched the bid. Since then, the shares have traded above that level and jumped more than 2% in Milan after Alta Global comments on Wednesday. Creval was up 1.3% as of 12:38 p.m.

Credit Agricole’s bid, made through its Italian unit, would strengthen its position in the wealthy north of the country, doubling its market share in Lombardy, and consolidate its role as the sixth-biggest retail bank in Italy with 3 million customers.

Ahead of the tender and pending regulatory approval, Credit Agricole bought shares that will take its holding to about 17%. The French bank’s top executives have repeatedly said they will not change the terms of the offer.

“We welcome the unsolicited offer by Credit Agricole, as we agree with its strategic rationale,” Pivovarov said. However, “even on a stand alone basis, the fair value of Creval is higher and we don’t believe that shares will crash if Credit Agricole’s takeover fails. The entire banking sector is up 30% since November.”

Alta Global sees Creval increasing its return-on-equity --a key measure for financial stocks-- with growing revenues, monetization of deferred tax assets and cost cuts, he said.

Creval’s balance sheet improved since Luigi Lovaglio was appointed CEO in 2019, focusing on higher-margin products and curbing risk. The non-performing loan ratio fell to 5.8% and its CET1 ratio, a measure of financial strength, was at 19.6% at the end of 2020.

“We invite board members to evaluate all strategic alternatives to unlock further shareholder value,” Pivovarov said.

Renamed Alta Global in 2019, the firm is a deep-value event driven investor founded in 2011 by Pivovarov, a hedge fund veteran who previously worked at Third Point and Old Lane.

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