UniCredit to buy Italy's Capitalia for EU21.8b.

By STEVE GOLDSTEIN, MARKETWATCH
May 21, 2007 07:45

UniCredit on Sunday announced it was buying Italy's third-largest bank, Capitalia, for EU21.8 billion, in a deal that will transform it into Europe's second-largest bank.

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MarketWatch: In-depth global business coverage UniCredit on Sunday announced it was buying Italy's third-largest bank, Capitalia, for EU21.8 billion, in a deal that will transform it into Europe's second-largest bank. UniCredit said it would exchange 1.12 of its shares for every Capitalia share. The deal values Capitalia at a 6% premium of EU8.41 a share. UniCredit has a market capitalization of EU78.06b. The deal will make UniCredit the world's sixth largest by market capitalization, behind only Citigroup, Bank of America, HSBC Holdings, Industrial and Commercial Bank of China and J.P. Morgan Chase. Shareholders with over 30% of Capitalia's shares voted to accept the offer. UniCredit's two top executives will take command of the combined bank. Alessandro Profumo will become chief executive of the combined bank, and Dieter Rampl will be chairman. Capitalia said its chief executive, the highly regarded Matteo Arpe, will step down on May 31. Arpe clashed with Capitalia's chairman, Cesare Geronzi, in a well-publicized feud. His resignation was expected. Capitalia thanked him for "the extraordinary work carried out with capability and determination over the last five years." Capitalia's shares have quadrupled since Arpe took over. Geronzi will become vice chairman of the combined bank. UniCredit been arguably the most acquisitive bank in Europe over the last decade after tying together seven regional Italian banks back in 1997. It bought US fund manager Pioneer Investments for $1.2b. in 2000, a number of banks in Central and Eastern Europe and Germany's HVB Group for $18.7b. in 2005. In addition to the battle between Arpe and Geronzi, leading Capitalia shareholder ABN Amro is itself the target of a bidding war, which has effectively ruled the Dutch bank out of the race to buy the Roman bank. Banco Santander, another bank with designs on Italy, also is caught up in the ABN bid battle, as it's part of a consortium led by Royal Bank of Scotland vying for the Dutch bank. The deal will give UniCredit a larger presence in its home market, and dilute its weighting from Germany, Austria and Central and Eastern Europe. "The Italian market offers high profitability and good growth prospects, but it will water down somewhat the profitable growth linked to the German and Austrian turnaround and the Central and Eastern European restructuring and economic growth," said Luigi Tramontana, an analyst at Banca Akros, in a note to clients on Friday. MarketWatch: In-depth global business coverage


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