Banco BPM Shares Rise 9.45% on Proposal to Merge With Crédit Agricole Italia
Key Facts
Banco BPM shares rose 9.45% in an Investing.com update published on Nov. 9, after Crédit Agricole proposed opening talks on a merger with its Italian unit, Crédit Agricole Italia. The French group submitted its proposal to Banco BPM’s board for evaluation and described it as friendly. The proposal puts the Italian bank at the center of the new entity, which would remain listed in Milan. The move comes as Italy’s banking sector sees efforts to reshape ownership and pursue mergers. But the proposal does not mean the deal is complete, and Banco BPM has not yet announced its acceptance.
The proposed exchange terms offer Banco BPM shareholders a 20% premium, in addition to an extraordinary distribution of €1 billion to current shareholders. The proposed terms thus combine additional value through the exchange with a separate cash payment, according to a Crédit Agricole statement. The French group’s stake in the merged entity would rise to about 45%, compared with its current 29.6% stake in Banco BPM, according to Reuters via MarketScreener. That would make Crédit Agricole the largest shareholder under the proposal, while the entity would remain listed in Milan. These figures remain tied to the proposed deal structure and approval by the bank’s board, its shareholders and the relevant authorities.
Crédit Agricole estimated expected annual synergies at about €800 million before tax. The group said the proposal could increase Banco BPM’s earnings per share by about 24% in 2027, based on the expected full impact of the pre-tax synergies. These estimates form part of the financial rationale the group presented for combining the two banks’ businesses. The plan also includes Crédit Agricole’s Italian life and general insurance activities. The estimates remain part of the group’s proposal, which does not say that their effects have already been realized.
In terms of scale, Crédit Agricole says the new entity would be Italy’s third-largest banking group, serving 6.5 million customers through more than 2,300 branches. The proposal says Giuseppe Castagna, Banco BPM’s current chief executive, would lead the new entity. It also provides for a majority of independent directors on the board. These arrangements would keep the Italian bank’s management in a leadership position within the proposed structure, while giving the French group a larger stake in the merged entity. The plan brings together Banco BPM’s domestic banking business and Crédit Agricole’s Italian activities in insurance.
The proposal follows a series of attempts and moves involving Banco BPM. On Nov. 5, Castagna said the bank did not then see a proposal from Crédit Agricole, but would consider any opportunity if one were presented. This came after Monte dei Paschi shareholders rejected a plan centered on acquiring Banco BPM, while Castagna said the previous week that a new deal between the French and Italian banks could emerge. Banco BPM had announced on July 31 that it was abandoning efforts to explore a merger with Monte dei Paschi after talks stalled. This context places Crédit Agricole’s new proposal after the failure of an earlier path to restructuring Italy’s banking sector.
Completion of the proposed deal requires approval at an extraordinary meeting of Banco BPM shareholders and regulatory approvals, including from the European Central Bank, and is also subject to Italy’s “golden power” rules. The proposal could be completed in the second half of 2027, according to the timeline provided by Crédit Agricole. Until then, the proposal remains subject to review by the bank’s board and the required approval processes. Castagna previously said the bank would consider any merger opportunity if a proposal from Crédit Agricole emerged. The announced timeline links approval by the parties and relevant authorities to the potential completion date.