Intesa Sanpaolo's recent takeover bid on rival UBI Banca, which according to a group of UBI Banca investors undervalues stock, has reopened the debate on banking consolidation in Europe.
A group of UBI Banca investors holding 1.6% of the Italian bank's capital said on Monday that the takeover offer by Intesa Sanpaolo significantly undervalues the stock, the New York Times reported.
The reaction came around one week after the Italian bank Intesa Sanpaolo launched a €4.86bn bid to acquire rival banking firm UBI Banca.
Where in the US there is an efficient market with ongoing consolidation, in Europe there is still lot of work to do," says César Gil, Bankia's head of FoF
The Italian bank, which is the biggest in the country, said it would offer 17 newly issued shares for every 10 UBI Banca shares tendered. It explained the bid corresponded to a value of €4.25 per share in UBI Banca, or a 27.6% premium to UBI's share price in mid-February.
If successful, the bank emerging from the integration would be the seventh-largest bank in the eurozone with €1.1trn in assets and combined revenues of around €21bn. It would also give Intesa €3m retail, small business and private clients.
Intesa's offer was seen by several market voices as an attempt by the bank to start a consolidation wave in Italy's fragmented banking system.
Over a decade after the global financial crisis, low profitability remains a major challenge for European lenders, hit by tougher rules following the global financial crash and European Central Bank's ultra-loose monetary policy that has made lending unprofitable.
This tough scenario for the banks of the old continent has led supervisors to make repeated appeals for European banks to unite forces and thereby, improve margins by reducing competition, cutting costs, and boosting that persistent low profitability.
But, diverging regulation across different countries make cross-border mergers quite complicated.