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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Aviva plc    AV.   GB0002162385

AVIVA PLC

(AV.)
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UBI spurns Intesa's offer and pledges to boost dividends

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07/03/2020 | 03:03pm EDT
UBI Banca Popolare Commercio & Industria logo is seen in Milan

By Andrea Mandala and Valentina Za

UBI Banca on Friday rejected a takeover bid by rival Intesa Sanpaolo as inadequate and risky for its shareholders, while pledging to boost dividends despite cutting profit forecasts.

Intesa is due to launch an all-paper offer on Monday to buy UBI and drive earnings through cost cuts at a time when the COVID-19 pandemic is set to erode already feeble returns in the banking industry.

UBI CEO Victor Massiah vowed to speed up the search for an alternative, friendly M&A option if UBI remained independent.

Intesa is offering 1.7 new Intesa shares for each UBI share, a ratio which UBI's board said would penalise its shareholders versus Intesa's current investors.

Italy's second biggest bank made its takeover proposal in February, potentially kicking off long-awaited Italian bank consolidation.

"By not including a cash component, the offer leaves UBI shareholders exposed to the risks that the transaction's strategic goals may not be reached," UBI said.

It added such goals were uncertain given a lack of detail and the fact that asset disposals in the past have helped Intesa sustain its generous dividend policy.

Intesa CEO Carlo Messina said in a note the decision was in the hands of UBI shareholders, adding that some of them were already supporting a merger that would help the local economy.

Intesa is betting on the prospect of higher returns winning over investors and most analysts recommend that UBI shareholders should tender their stock.

UBI shares trade in line with the exchange ratio, indicating the market expects the deal to go through.

But a group of local UBI shareholders oppose the bid, which may limit take-up and make it harder for Intesa to succeed.

The offer is valid if accepted by 50% of UBI's capital plus one share. A 66.7% take-up would ensure control of extraordinary shareholder resolutions regardless of attendance.

UBI says the deal only aims to take out a competitor and would create an "anomaly" in Europe by giving Intesa a dominant domestic position not seen in other countries.

Before rejecting the offer, UBI on Friday updated a three-year business plan originally released on Feb. 17, just hours before Intesa announced the bid and a few days before coronavirus contagion hit Italy.

UBI cut its 2022 net profit estimate to 562 million euros (506 million pounds), from 665 million, after raising estimated loan losses under the plan by more than 700 million euros due to COVID-19.

To respond to Intesa's offer of higher payouts, UBI said asset sales could help it to distribute to shareholders around 840 million euros in excess capital while keeping its CET1 ratio above 12.5%.

"We have hidden treasures on our balance sheet," Massiah said.

Following in the footsteps of Intesa, which this week closed the sale of its retailers' payments business, UBI said it expected to raise 350 million euros with a similar disposal.

Also replicating Intesa's successful business model focused on wealth management and insurance, UBI said it would boost its in-house insurance business by buying 100% of the Aviva Vita "bancassurance" joint-venture if it stayed independent.

(Writing by Valentina Za; Editing by James Mackenzie and Jane Merriman)

Stocks mentioned in the article
ChangeLast1st jan.
AVIVA PLC 1.47% 304.7 Delayed Quote.-27.47%
INTESA SANPAOLO SPA 1.16% 1.8828 Delayed Quote.-19.83%
UBI BANCA S.P.A. 0.58% 3.785 Delayed Quote.29.98%
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Financials
Sales 2020 45 020 M 58 847 M 58 847 M
Net income 2020 1 485 M 1 941 M 1 941 M
Net Debt 2020 6 216 M 8 125 M 8 125 M
P/E ratio 2020 6,93x
Yield 2020 8,83%
Capitalization 11 923 M 15 555 M 15 585 M
EV / Sales 2020 0,40x
EV / Sales 2021 0,35x
Nbr of Employees 31 181
Free-Float 97,1%
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Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 373,40 GBX
Last Close Price 303,70 GBX
Spread / Highest target 89,3%
Spread / Average Target 23,0%
Spread / Lowest Target -29,0%
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Managers
NameTitle
Amanda Blanc Chief Executive Officer & Director
Mark George Culmer Non-Executive Chairman
Erica Arnold Chief Operating Officer
Jason Michael Windsor CFO, Executive Director & Chief Investment Officer
Michael Mire Independent Non-Executive Director
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