Intesa to buy Italian rival Sanpaolo for €29.6 bln
The deal marks a victory for Bank of Italy governor Mario Draghi, who was appointed last year after his predecessor resigned in a row over protectionist policies in Italian banking. Draghi has been a supporter of consolidation among Italy's numerous retail banks. His predecessor, Antonio Fazio, was accused of favoring an Italian bidder over Dutch bank ABN Amro during a takeover battle for Italy's Antonveneta bank in 2005. The scandal which precipitated Fazio's resignation damaged the reputation of Italy's banking regulators. A successful merger between Intesa and Sanpaolo would prove that real changes are taking place. Foreign shareholders, including French bank Credit Agricole and Spain's Santander, are key to the success of the deal. Intesa and Sanpaolo are expected to reveal details of the tie-up after meetings on Saturday.
Other Italian banks are also believed to be attempting to form new merged identities. The purchase, the biggest bank takeover in Europe since Royal Bank of Scotland Group Plc's $37.8 billion acquisition of London-based National Westminster Bank Plc in 2000, will create an Italian lender with a market value of about 65 billion euros, ranking it among the top 10 banks in Europe. Intesa CEO Corrado Passera will oversee the combined company, which will have twice as many customers in Italy as UniCredit SpA, the country's biggest bank by assets. Together, Intesa and Sanpaolo will have about 20% of Italy's banking market. The combined company expects to earn about € 7 billion by 2009.
France's Credit Agricole SA will be the new bank's biggest shareholder, with a 9.1% stake. Paris-based Credit Agricole, which currently owns almost 18% of Intesa, yesterday approved the „outline” of the merger and said it wants a guarantee of a solution to „safeguard and enhance” its position in Italy. The bank may agree to sell its stake in return for the right to buy as many as 700 of Intesa and Sanpaolo's excess branches in Italy, as well as other businesses, Italy's MF reported Aug. 25. Compagnia di San Paolo, an Italian banking foundation, will be the second-largest shareholder of the combined company, with a 7% stake. Assicurazioni Generali SpA, Italy's largest insurer, will own 4.9%. Santander Central Hispano SA will own 4.2%. The transaction won't affect plans for the stock market listing of Eurizon Financial Group, Sanpaolo's asset management and insurance unit, Sanpaolo said on Aug. 26. Intesa will issue 5.84 billion new shares as part of the transaction, which is expected to be completed by the end of 2006 or early next year, the companies said. Shareholders will vote on the merger in December. Gruppo Banca Leonardo SpA and Merrill Lynch & Co. are advising Intesa in the transaction. Sanpaolo is advised by New York-based Citigroup. (BBC News, ft.com, Bloomberg)
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