By Valentina Za and Andrea Mandala
MILAN (Reuters) – Intesa Sanpaolo expects synergies from its proposed takeover of UBI Banca would be only slightly less if it cannot fully incorporate its Italian rival, and would not affect a 2022 profit goal of at least 5 billion euros ($5.6 billion).
Intesa <ISP.MI> published details of its all-paper bid for UBI <UBI.MI> on Friday, after getting a green light from market regulator Consob, ahead of launching the offer from July 6.
The bank made the unsolicited takeover bid for UBI, which would bring it an additional 3 million customers, in February in an effort to lift earnings through cost cuts and a focus on wealth management and insurance.
The offer is valid with a take-up of 50% plus one share, although Intesa said that it may not be able to incorporate UBI if the bid acceptance level is below a 66.67% threshold which guarantees control of extraordinary shareholder resolutions.
In this case, expected synergies would total 611 million euros before taxes in 2024, instead of the 700 million euros forecast in case of a full-blown merger, it added.
Intesa said higher costs if it were to keep UBI as a separate legal entity would not endanger the 2022 profit goal, which it has cut from an initial 6 billion euros due to the impact of the coronavirus crisis.
UBI investors will receive 1.7 newly-issued Intesa share for each of theirs under the terms of the offer by Intesa, which expects to gain an income boost due to the discounted market valuation for banks as Italy’s economy slumps.
It plans to use that sum to cover integration costs and increase provisions against loan losses at UBI.
Intesa said it expected an antitrust ruling on the deal ahead of the offer closing on July 28.
This has proven more complex to secure than anticipated and approval must come at the latest two trading days prior to the offer’s payment date on Aug. 3, Intesa said.
To win clearance, Intesa has agreed to sell assets as well as 532 branches of the combined entity to rival BPER Banca <EMII.MI>, a disposal that UBI’s board could approve after Intesa named a majority of directors at the bank.
The business to be sold to BPER was worth 660 million euros as of June 19, the prospectus showed.
Intesa said it had pledged to sell another 17 UBI branches on top of the BPER deal and this would be enough to appease the antitrust watchdog. It reserved the right to drop the takeover in case of additional requirements.
(Reporting by Valentina Za and Andrea Mandala; Editing by Gavin Jones and Alexander Smith)