La Banque Postale to Buy Out CNP in Largest 2021 Insurance Deal

(Bloomberg) -- French lender La Banque Postale is offering to buy the shares it doesn’t already own in CNP Assurances, valuing the firm at some 15 billion euros ($17 billion) in what stands to be the largest takeover of an insurer this year.

The Paris-based bank agreed to acquire the 16% stake in the insurer held by French banking group BPCE for 21.90 euros per share, and will make a takeover offer for the remaining 21% free float at the same price, according to a statement on Thursday.

The offer represents a premium of about 36% over CNP’s closing price of 16.08 euros on Tuesday. CNP Assurances’s shares jumped 36% to 21.85 euros in early Paris trading on Thursday.

A full takeover would surpass Apollo Global Management Inc.’s agreed purchase of Athene Holding Ltd in March which came in at $11 billion. The value of deals targeting insurers has more than doubled globally in 2021 to over $85 billion, the data show. 

Dealmaking in the insurance sector has accelerated in recent years as companies seek to gain scale amid low interest rates and the coronavirus pandemic. Canada’s Intact Financial Corp. and Danish insurer Tryg A/S agreed to buy the U.K’s RSA Insurance Group for 7.2 billion pounds ($9.9 billion) last year in one the biggest deals in the sector in Europe.

La Banque Postale gained control of CNP Assurances in March 2020, as part of the French State’s plan to create a strong publicly-owned financial firm. The bank, a subsidiary of French mail operator La Poste, was also in a shareholder pact with BPCE that was meant to last until 2030. The parties now want to extend their commercial agreement until 2035.

What Bloomberg Intelligence Says..

The announcement that La Banque Postale is acquiring Groupe BPCE’s 16.1% stake in CNP and will then make a public tender offer for the remainder looks likely to bring to an end CNP’s chapter as a public company at would seem a fair valuation of 10.4x 2022 earnings. The 21.9 euros a share offer price represents a 36% premium to the Oct. 27 close. CNP hasn’t traded at such levels since 2019.

-- Charles Graham, BI insurance analyst. For the full note click here

“The simplification of CNP Assurances’s shareholding structure will allow us to strengthen the efficiency of our bancassurance model and accelerate its international, partnership-based expansion,” La Banque Postale Chief Executive Officer Philippe Heim said in the statement.

The trading of CNP Assurances’s shares was suspended on Wednesday, following speculation that La Banque Postale could take control of the insurer after its shares gained 17% since the beginning of the month. The French lender later confirmed being in talks with BPCE regarding the insurer’s shareholding structure.

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