Credit Agricole proposes a merger to Banco Bpm: dividend of one billion, but no takeover bid

Crédit Agricole has proposed to Banco Bpm to start negotiations regarding a merger between Banco Bpm and Crédit Agricole Italia. We read it in a note. The merged entity would be centered around Banco Bpm and would continue to be listed on the Milan Stock Exchange.

The French group explains that the proposal towards Banco Bpm is a "friendly proposal", "subject to the evaluation of the board of directors" of Piazza Meda, and "represents a natural extension of the long-term partnership between Banco Bpm and Credit Agricole and of the mutual trust established between the two groups".

Third Italian banking group

The "strategic project" that Credit Agricole proposes to Banco Bpm which envisages a merger with Credit Agricole Italia "would create the third largest Italian banking group, serving 6.5 million customers through over 2,300 branches, combining a strong local presence, financial solidity and corporate expertise", we read in a note.

"The proposal is based above all on a long-term industrial and entrepreneurial vision. It aims to unite two groups deeply rooted in Italy to create a new national champion, inaugurating a new phase of development and broadening their growth prospects", adds Agricole.

Castagna would remain as CEO of the new group

"The current CEO of Banco Bpm", Giuseppe Castagna "would be confirmed as CEO of the new company". Credit Agricole writes this when announcing the proposed merger in Piazza Meda with Credit Agricole Italia. "The project aims to preserve the identity and operational autonomy of the company resulting from the merger, with a balanced corporate governance structure. The board of directors would continue to be composed of a majority of independent directors", it is underlined.

20% premium, dividend but no takeover bid

For Banco BPM shareholders, the proposal provides for an exchange ratio that reflects a 20% premium, in addition to the payment of an extraordinary dividend of Euro 1 billion to the current shareholders of Banco BPM.

The expected synergies are estimated at Euro 800 million per year. The potential transaction would result in an estimated increase of approximately 24% in Banco BPM's earnings per share in 2027, thanks to the premium offered and significant synergies.

As a consequence of its contribution, Crédit Agricole would increase its stake from the current 29.6% of the capital of Banco BPM to approximately 45% of the capital of the company resulting from the merger. The potential operation would be conditioned, inter alia, on: (i) the approval of the extraordinary meeting of Banco BPM shareholders, with the majorities required to benefit from the so-called "whitewash" (thus exempting Crédit Agricole S.A. from the obligation to promote a mandatory takeover bid) and (ii) obtaining the usual authorizations for this type of operation (including authorizations from the ECB as well as according to the Italian "golden power" regulations). The operation proposed to Banco BPM could be completed in the second half of 2027