Credit Agricole offers $875m for Italy’s Credito Valtellinese

Bloomberg

French lender Credit Agricole SA offered to buy Italy’s Credito Valtellinese for about 737 million euros ($875 million) in cash as consolidation accelerates in European banking.
The unsolicited bid of 10.50 euros a share, made through its Italian unit, represents a 21.4% premium to the November 20 closing price, according to a statement from Credit Agricole. The French lender, which took a 5% stake in 2018 in the Italian bank commonly known as Creval, said it has already received a commitment letter from Davide Serra’s Algebris Investments for the sale of that firm’s 5.4% stake.
A deal would strengthen Credit Agricole’s position in Italy’s wealthy north, including a doubling of its market share in Lombardy, and consolidate its role as the sixth-biggest retail bank in Italy, with 3 million clients. The offer adds to a series of mergers this year as the economic fallout from the pandemic and low interest rates fuel consolidation, particularly in Italy and Spain, two countries hit hard by the virus.
Most deals this year have been domestic as regulatory obstacles to cross-border transactions remain, though Credit Agricole’s bid suggests acquisitions by local units may offer an alternative route. Credit Agricole had been examining the potential acquisition of small and medium-sized banks in Italy since earlier this year, according to people with knowledge of the matter. Targets included Banco BPM as well as Creval.
“This is a good deal for Credit Agricole to boost its presence in Italy,” said Stefano Girola a portfolio manager at Alicanto Capital SGR in Milan. “The transaction is well aligned with Agricole’s strategy in Italy, which has always been based on integrating into its platform mid- and small-sized banks where it’s easier for them to implement their product distribution capabilities.”
The French bank already has an extensive presence in the country including retail, corporate and investment banking operations. It has expanded with acquisitions in asset management and retail banking starting in 2007.
Italian banking consolidation shifted into high gear earlier this year with Intesa Sanpaolo SpA’s takeover of smaller rival Unione di Banche Italiane SpA. In recent weeks, Italy and UniCredit SpA have been intensifying talks about a takeover of state-controlled lender Banca Monte dei Paschi di Siena SpA, according to people familiar with the matter, while Banco BPM SpA signalled it’d be open to a potential combination with Italian rival BPER Banca SpA.
The merger wave is also spreading in Spain, where transactions include CaixaBank SA’s agreement to buy Bankia SA and Banco Bilbao Vizcaya Argentaria SA talks on a takeover of Banco Sabadell SA.
Credit Agricole in 2018 bought 5% of Creval through its insurance unit and said it could eventually double the holding. It increased its stake to almost 10% in recent months, Giampiero Maioli, the head of the French bank’s Italian operations, said on a conference call. French businessman Denis Dumont until now has been the main shareholder in Creval with a 9.9% stake.
The offer to buy Creval follows a deep restructuring of the Italian bank, started in 2018 with a 700 million-euro capital raising that attracted investors including Steadfast Capital Management LP and Algebris.