UniCredit has staunchly defended its decision to withdraw its offer for Banco BPM, describing it as a "difficult but absolutely right" move for its shareholders and in line with the bank's value creation strategy.
Last night, the Milan-based lender announced it was pulling out of the Banco BPM deal, citing the impossibility of meeting the Golden Power condition as the primary reason.
This decision comes despite Consob, Italy's financial regulator, having suspended the public exchange offer (Ops) for a second time in two months, granting a 30-day pause due to the uncertainty stemming from a recent administrative court ruling and the European Commission's review of government-imposed conditions through the Golden Power decree.
As anticipated, UniCredit's second-quarter results conference call was dominated by questions regarding the bank's M&A strategy.
CEO Andrea Orcel reiterated that the withdrawal was prompted by persistent regulatory uncertainty surrounding the Golden Power rule. Despite interventions from both the administrative court (Tar) and the European Commission, which requested clarification from the government, the situation remained at a standstill, Orcel explained.
"We have been completely stuck since early April. We couldn't engage with shareholders, explain our position, or conduct an orderly process. And there was no clear deadline," Orcel stated.
Even with an extension to the Ops deadline, there would have been no guarantees regarding the outcome of the Golden Power review, he added.
Further complicating matters, the Italian government was considering new legislation, making the outlook even murkier. This uncertainty turned the Banco BPM dossier into "a drag" on the bank, forcing UniCredit to freeze its €3.6 billion buyback plan pending further clarity, Orcel highlighted.
The CEO described entering "completely uncharted territory" regarding the Ops, which ultimately led the bank to "draw a line" under the Banco BPM deal and refocus on matters within its control.
M&A Only If It Creates Value
Orcel confirmed that UniCredit has €8.5-10 billion in excess capital and will continue to monitor opportunities in 13 countries, but only those consistent with its value creation criteria. At present, however, he sees no attractive options.
"We monitor them and, if they meet our guidelines, we will consider them," he said, adding, "If a deal proves unviable during execution, we will walk away. We did so in 2021, and we are doing it now."
With Italy set aside for the time being, UniCredit is now turning its attention to Germany, where it aims to convert its derivative positions in Commerzbank to raise its stake to 29% by year-end, as planned. While there are currently no ongoing talks, the bank remains prepared to wait patiently until the counterpart is ready to negotiate, Orcel noted.
"At the moment, we are just an investor and will remain so," he reiterated. "There is nothing else on the table. We do not rule out the possibility in the future, but for now, no."
BANCO BPM: A Missed Opportunity
In last night's statement, UniCredit expressed regret over the failed Banco BPM acquisition, calling it "a missed opportunity not only for BPM stakeholders but also for Italian business communities and the broader economy."
According to UniCredit Chairman Pier Carlo Padoan, "the combination of UniCredit and Banco BPM would have delivered tremendous added value for all stakeholders."
The bank also leveled criticism at Banco BPM and its leadership for "depriving their shareholders of the dialogue that typically takes place during an offer period to understand the value created by the combination and determine which conditions would have been acceptable to move forward."
(Reporting by Andrea Mandalà; Editing by Antonella Cinelli and Stefano Bernabei)
