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Credit Agricole offers US$875m for Credito Valtellinese

[PARIS] French lender Credit Agricole offered to buy Italy's Credito Valtellinese for about US$875 million in cash as consolidation accelerates in European banking.

The unsolicited bid of 10.50 euros (S$16.71) a share, made through its Italian unit, represents a 21.4 per cent premium to the Nov 20 closing price, according to a statement from Credit Agricole Monday. The French lender, which took a 5 per cent stake in 2018 in the Italian bank commonly known as Creval, said it has already received a commitment letter from Davide Serra's Algebris Investments for the sale of that firm's 5.4 per cent stake.

A deal would strengthen Credit Agricole's position in Italy's wealthy north, including a doubling of its market share in Lombardy, and consolidate its role as the sixth-biggest retail bank in Italy, with 3 million clients. The offer adds to a series of mergers this year as the economic fallout from the pandemic and low interest rates fuel consolidation, particularly in Italy and Spain, two countries hit hard by the virus.

Most deals this year have been domestic as regulatory obstacles to cross-border transactions remain, though Credit Agricole's bid suggests acquisitions by local units may offer an alternative route. Credit Agricole had been examining the potential acquisition of small and medium-sized banks in Italy since earlier this year, according to people with knowledge of the matter. Targets included Banco BPM as well as Creval.

"This is a good deal for Credit Agricole to boost its presence in Italy," said Stefano Girola a portfolio manager at Alicanto Capital SGR in Milan. "The transaction is well aligned with Agricole's strategy in Italy, which has always been based on integrating into its platform mid- and small-sized banks where it's easier for them to implement their product distribution capabilities."

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The French bank already has an extensive presence in the country including retail, corporate and investment banking operations. It has expanded with acquisitions in asset management and retail banking starting in 2007.

Italian banking consolidation shifted into high gear earlier this year with Intesa Sanpaolo's takeover of smaller rival Unione di Banche Italiane. In recent weeks, Italy and UniCredit have been intensifying talks about a takeover of state-controlled lender Banca Monte dei Paschi di Siena, according to people familiar with the matter, while Banco BPM signalled it'd be open to a potential combination with Italian rival BPER Banca.

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