Crédit Agricole proposes Banco BPM merger, 20% premium and €1 bln dividend

Crédit Agricole has proposed merging its Italian unit with Banco BPM, a deal that would increase Crédit Agricole's stake in Banco BPM to approximately 45%, up from 29.6%, without requiring a mandatory takeover bid. In return, Banco BPM shareholders would receive a 20% valuation premium and a €1 billion special dividend. The proposal, described as friendly by Crédit Agricole, was submitted to Banco BPM's board for their evaluation.

The 20% premium is based on the value Crédit Agricole places on Banco BPM relative to the projected 2027 price-to-earnings multiple. This premium, combined with a €1 billion dividend, would be paid out to Banco BPM's current shareholders. The deal would necessitate approval from Banco BPM's extraordinary shareholder meeting by the majority required for the 'whitewash' procedure, ensuring Crédit Agricole is not obligated to launch a mandatory tender offer.

This approval requires at least two-thirds of the capital represented at the meeting, and must not face dissenting votes from a majority of shareholders present, except Crédit Agricole or any shareholder holding a relative majority above 10%.

Crédit Agricole estimates that the merger could boost Banco BPM's earnings per share by about 24% in 2027, attributed to the premium offered and synergies. Expected synergies are valued at €800 million annually, with the 24% increase being based on these pre-tax, run-rate synergies. Post-merger, the combined entity would become Italy's third-largest banking group, serving 6.5 million customers through over 2,300 branches.

The bank would retain its listing in Milan, with Banco BPM's current CEO staying in the role. The board would retain a majority of independent members, including Crédit Agricole's Italian life and non-life insurance businesses.