Italy’s BPER Proposes Buying Troubled Carige for Token Price

(Bloomberg) -- Italian lender BPER Banca SpA offered to take over troubled Banca Carige SpA for a token price on the condition that the move doesn’t harm its capital and boosts its earnings. 

Modena-based BPER submitted a non-binding offer to Italy’s FITD interbank fund for the 88.3% of Carige that’s been held mainly by the fund following a state-sponsored rescue two years ago, according to a statement late Tuesday. 

BPER would pay 1 euro after a capital injection by the fund of 1 billion euros ($1.1 billion) to cover integration costs, de-risking moves and potential charges from early termination of some agreements. 

Genova-based Carige has lurched from crisis to crisis and was placed under European Central Bank administration before its 2019 rescue, which was managed by FITD. After a failed attempt to sell Carige to Cassa Centrale Banca, the fund hired advisers to find another buyer. FITD, which is made up of voluntary contributions from Italian banks, now owns 80% of Carige, while Cassa Centrale owns 8.3%.

BPER rose as much as 7.6% in early trading in Milan on Monday, and was up 7.1% at 9:20 a.m., giving the bank a market value of 2.6 billion euros. Carige rose as much as 18%.

“Given the potential financials of the deal, we see this as an opportunity for BPER,” Azzurra Guelfi, an analyst at Citigroup Inc, wrote in a note. This deal is also “a further step forward for Italian banking consolidation and the removal of a potential overhang.”

Italy earlier this year extended tax benefits for mergers between banks to mid-2022 -- setting a 500 million-euro ceiling -- a move that would provide fiscal benefits to a prospective buyer of Carige. 

BPER’s offer will expire if the fund doesn’t grant the lender exclusivity by Dec. 20 or if the two sides fail to sign a binding memorandum of understanding by Dec. 31. 

In the event the deal is successful, BPER will launch a mandatory offer on the remaining shares at 80 euro cents per share, including a premium of about 29% over Carige’s closing price on Dec. 13, a day before speculation began to mount following local media reports of a possible bid.

©2021 Bloomberg L.P.