Intesa, BPER revise terms to try to clear antitrust hurdles to UBI deal

Italy’s Intesa Sanpaolo (ISP.MI) has agreed to sell more branches and assets to rival BPER (EMII.MI) to try to overcome antitrust objections to its proposed takeover of UBI Banca (UBI.MI).

Intesa on Monday submitted beefed-up competition remedies to the regulator after the antitrust watchdog said the UBI deal would create or strengthen Intesa’s dominance in several areas.

In statements on Monday, Intesa and BPER said they had agreed BPER would buy 532 branches from the combined Intesa-UBI group if the bid succeeded, up from 400-500 under a previous agreement.

The antitrust body took issue with an accord between Intesa and BPER that sought to anticipate competition problems as Italy’s biggest retail bank prepared to bid for the country’s fifth-largest lender.

The regulator in its preliminary review of the takeover said too much uncertainty surrounded the BPER deal.

Intesa, which already has approval from banking supervisors, has been working to resolve competition issues before a final hearing on Thursday.

Under the revised deal, BPER will add 26 billion euros ($29 billion) in net client loans, lowering its impaired loan ratio to 8.4% of total lending.

BPER expects it will need to raise 600-700 million euros via a share issue to finance the acquisition, two sources with knowledge of the matter said.

The price mechanism for the sale, which was revised following the COVID-19 outbreak in Italy to take into consideration the reduced value of financial stocks, has been further amended, the two banks said.

“The pricing has been slightly improved for BPER and currently its maximum cash-out should be 640 million euros, well below the maximum 1 billion euro capital increase approved by its extraordinary general meeting,” Kepler Cheuvreux said.

BPER is set to pay whatever is lowest of a sum representing 0.55 times the core capital of the business it is buying and an amount equivalent to 0.78 times the implied multiple paid by Intesa for UBI’s core capital – down from 0.8 times previously.

BPER was advised by Rothschild, BofA and Citi. Chiomenti acted as legal adviser.