UBI Top Investor Calls Bid Hostile as Intesa Sticks to Price

(Bloomberg) -- The top investor group in Unione di Banche Italiane SpA called a takeover bid from Intesa Sanpaolo SpA “unacceptable” and “hostile,” after Intesa’s chief executive officer said he won’t sweeten the offer.

“Intesa’s offer appears hostile, unsolicited and not consistent with UBI’s implicit value, so it is not acceptable,” the CAR investor group, which owns about 18% of the bank, said in a statement after a meeting in the city of Bergamo, where UBI is based.

Intesa CEO Carlo Messina this week launched an all-stock 4.9 billion euro ($5.3 billion) bid at a premium of more than 28% to UBI’s price that day. If successful, the deal would be the biggest European banking acquisition in more than 10 years, according to data compiled by Bloomberg.

UBI shares fell for a second day, dropping as much as 2.3% and trading down 1.3% at 10:19 a.m in Milan.

The bank may look at alternative mergers and could consider acquiring Banca Monte dei Paschi di Siena SpA, Reuters reported, citing unidentified people familiar. Separately, BNP Paribas SA was at one point reportedly studying an offer for UBI and might be weighing a counter-bid, Il Messaggero reported Friday, citing rumors.

UBI’s board doesn’t have many options if it wants to defend itself from a hostile bid. Under Italian regulations, the board of a company subject to a bid can’t take direct actions -- including changes in governance, capital increases or mergers -- which could affect the process. That would mean UBI’s only alternative would be a separate bid.

Intesa’s bid took UBI’s board and biggest shareholders by surprise. CEO Victor Massiah heard of it late Monday evening, on arriving in London to meet with investors after announcing a new three-year plan.

There is “zero chance” Intesa will improve its offer, Messina said in an interview with Bloomberg TV’s Francine Lacqua on Thursday.

If the takeover attempt fails, “we will continue to deliver our results, we have a plan and we are delivering,” Messina said at the bank’s 19th century offices in Milan.

Massiah on Wednesday received a mandate from his board of directors to hire advisers to consider the bank’s options. The bank has hired Credit Suisse Group AG, Reuters reported.

UBI investors will get 17 new shares of Intesa for every 10 shares they hold under the plan. That values UBI at about 4.25 euros a share, Intesa said.

The bid, seen as likely to trigger further consolidation among Italy’s struggling banks, is in line with what the European Central Bank wants to see across the industry, Messina said in the interview.

“We can’t make a transaction like this without positive indications from the supervisor,” Messina said. “It’s clear we have to create champions to compete with the U.S. and China.”

While the executive said he expects his bank’s deal to usher in a wave of banking deals, he ruled out Intesa making other moves in Europe.

The UBI transaction alone will allow Intesa to “become number three or four in Europe,” the executive said.

Messina said the move is a clear sign that Italy’s banking sector has bounced back from years of difficulties.

“Italy probably for the first time in the last few years is a star in Europe looking at the banking sector,” the CEO said. “This demonstrates that in our country if you want to take decisions we have the ability to take responsibility to propose a transaction.”

--With assistance from Francine Lacqua, Marco Bertacche, Ross Larsen and Alberto Brambilla.

To contact the reporters on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net;Flavia Rotondi in Rome at rotondi@bloomberg.net;Sonia Sirletti in Milan at ssirletti@bloomberg.net

To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Jerrold Colten, Dan Liefgreen

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