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UniCredit SpA announced Monday its €10 billion ($10.5 billion) all-share offer to acquire Banco BPM SpA, aiming to establish itself as a dominant player in the European banking sector. If successful, the acquisition would create the third-largest bank in Europe by market capitalization.

The offer values Banco BPM shares at €6.657 each, reflecting a 0.5% premium over Friday’s closing price on the Euronext Milan stock exchange. The deal involves issuing 0.175 UniCredit shares for each of Banco BPM’s 1.5 billion shares. UniCredit expects to finalize the acquisition by June 2025 and complete full integration within a year.

Strategic Goals and Benefits of the Deal

UniCredit CEO Andrea Orcel emphasized the significance of the acquisition for the bank's growth in Italy and across Europe. "Europe needs stronger, bigger banks to help it develop its economy and help it compete against the other major economic blocs," Orcel said. "Thanks to the work done over the past three years, UniCredit is now well positioned to also answer that challenge."

The merger is projected to yield significant financial benefits, including:

• Cost Reduction: Annual operating costs are expected to drop by approximately €900 million due to efficiency improvements and operational streamlining.
• Enhanced Services: Integration of Banco BPM’s products and upgraded technology could lead to additional annual savings of €300 million.
• Market Expansion: Strengthening UniCredit’s domestic and international reach to create a pan-European banking leader.

Regulatory and Shareholder Approvals Pending

The acquisition must gain approval from the European Central Bank, the Bank of Italy, and other undisclosed regulatory authorities. Banco BPM’s shareholders also need to consent to the deal, although the timeline for their meeting and the required approval percentage were not disclosed. Additionally, UniCredit has not clarified if its shareholders must approve the transaction.

Broader Implications for UniCredit’s Strategy

UniCredit confirmed that its offer for Banco BPM is independent of its proposed acquisition of Commerzbank AG, one of Germany’s largest banks by assets. The Italian lender has also disclosed plans to merge the Romanian operations of Greece's Alpha Bank into its own local subsidiary by late 2025 in a €293 million deal.

The Banco BPM acquisition aligns with UniCredit’s vision of sustained growth while maintaining its commitment to shareholder returns. The bank stated it would proceed with the remaining €1.7 billion portion of its 2024 share buyback program after completing the deal.

UniCredit offers €10bn for Banco BPM : Legal and Financial Advisers

UniCredit is represented by Cappelli Riolo Calderaro Crisostomo Del Din & Partners in the transaction. Counsel information for Banco BPM was not immediately available. Both banks have refrained from commenting on the deal at this time.