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By Valentina Za and Giuseppe Fonte
MILAN (Reuters) -UniCredit CEO Andrea Orcel has been drawing up plans to take over Banco BPM for years and was almost ready to pull the trigger, two sources close to the matter said.
But instead of being able to choose the right moment, UniCredit had to rush out a 10 billion euro bid when Italy's third-largest lender made its own M&A moves, putting Orcel's dealmaking reputation on the line.
UniCredit, which was already facing headwinds in its pursuit of Germany's Commerzbank, declined to comment.
BPM's shares leapt 12% in the week between announcing a 1.6 billion euro ($1.7 billion) bid to gain control of fund manager Anima Holding and that it had bought 5% of Italy's Monte dei Paschi di Siena (MPS).
That raised the prospect of a tie-up between BPM and MPS that would see Italy's second-biggest bank sidelined in domestic M&A, forcing Orcel's hand.
On Nov. 22, he told a London conference his Commerzbank chase was stuck and he would wait for a new government in Berlin.
Just three days later, UniCredit informed Italy's market regulator before trading opened that it had launched an all-share buyout offer to BPM shareholders.
Orcel has long coveted BPM's position in Italy's wealthy Lombardy region, where UniCredit is weaker, but had baulked at the M&A premium in its shares, a person with knowledge of his thinking told Reuters.
Now he was offering a 15% premium to BPM's pre-Anima bid share price, but almost no premium over the share price before UniCredit's bid. BPM said this undervalues the bank and its shares have risen to around 15% above UniCredit's offer price.
"UniCredit has opened up two fronts, both very complex. The market is clearly saying that the Banco BPM deal is not going through at the price offered. As time passes, the price the market demands gets more expensive," said Bocconi University banking professor and SDA Bocconi dean Stefano Caselli.
Orcel has signalled he could offer BPM shareholders some cash and would sit down with 'industrial' investors starting with French bank Credit Agricole.
"Under the leadership of one of Europe's best known M&A bankers, UniCredit has to succeed on one of the two fronts," Caselli said, adding: "That requires a bold top up of the offer. UniCredit has the cash to pay up and it just should, walking away from both deals is not an option as things stand."
OUT OF FAVOUR
Members of Italy's conservative government oppose Orcel's proposal as it derails plans to join BPM with MPS in order to forge a strong rival to UniCredit and market leader Intesa Sanpaolo.