UBI Says Intesa Takeover Bid Doesn’t Reflect Bank’s Value

(Bloomberg) -- Unione di Banche Italiane SpA rejected Intesa Sanpaolo SpA’s unsolicited takeover bid as insufficient and increased its dividend estimate just days before the public offer is set to start.

The value of the offer is “inadequate” and “penalizes the shareholders of UBI Banca compared with the shareholders of Intesa” the bank said in a statement on Friday. The lack of a cash component in the deal presents unnecessary risks for UBI investors, it said.

The bank is seeking to stave off Intesa’s bid, described previously by some of its largest shareholder groups as hostile and insufficient. Intesa Chief Executive Officer Carlo Messina has maintained that he doesn’t plan to change the terms that were laid out in February and the bank will proceed if 50% plus one share is tendered.

UBI, updating a business plan announced just over four months ago, said it expects to increase excess capital distributed to shareholders to 840 million euros ($944 million) through 2022. That compares with a target in February of 510 million euros. At the same time, the bank lowered its net income estimate for 2022 and raised its expectations for loan-loss provisions.

Higher Payout

“It remains a bit unclear how UBI can distribute more capital than before with a lower bottom line and considering that regulators may block banks’ payout strategies” given the reglatory aid that’s been provided, Fidentiis Equities Fabrizio Bernardi said. The distributable dividend is 25% to 30% higher than the one envisaged in the previous plan, he said.

This is the first time that UBI’s board has commented on the offer, which is set to run from July 6 to July 28. Uncertainty caused by the move means that bancassurance agreements it planned to sign this year will be delayed, UBI said in separate statement.

Friday’s statement on the bid was supported by the board unanimously, Chairman Letizia Moratti said in a conference call.

Intesa is offering 17 new shares for every 10 held by UBI investors, a 28% premium to the stock’s value at the time of the announcement. The bank aims to reach a size that enables it to play a proactive role in the European banking scenario, according to the offer document released last week. Messina has said he hopes the move will encourage much needed consolidation in Europe’s financial industry.

Moratti argued that Intesa’s plan is aimed at strengthening its position in Italy by eliminating a competitor, without changing its positioning in Europe. That comes after Intesa’s remarks that the takeover will give it the tools to expand abroad. Massiah said that the bank will speed up the review of M&A options if it remains independent.

Intesa’s bid, the biggest banking M&A deal in Italy in more than 10 years, still needs approval from Italy’s competition regulator, which opened an inquiry into whether the transaction violates competition rules. To ease antitrust concerns, Intesa agreed last month to sell more bank branches than previously planned to BPER Banca SpA as part of the deal.

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