Tuesday saw Deutsche Bank (ETR:DBKGn) reassert its Buy rating and a price target of EUR 7.40 on Banco BPM SpA (BAMI:IM) (OTC: BNCZF), despite a new development in the market. Unicredit (BIT:CRDI) has launched an unexpected tender offer for Banco BPM, proposing a 100% stock-based exchange. The terms of the offer suggest a swap ratio of 0.175 Unicredit shares for each Banco BPM share, excluding dividends.
The bid from Unicredit is contingent on acquiring at least a 67% stake in Banco BPM. The offer equates to a valuation of Banco BPM at EUR 6.65 per share, which is in line with the bank's closing price on Friday. This valuation translates to a price-to-tangible book (P/TB) ratio of 0.85 times, which is less than half the estimated value of Banco BPM's banking operations when not accounting for its holdings in Anima, its consumer credit and insurance joint ventures, as well as excess capital and anticipated future dividends.
The analyst from Deutsche Bank has highlighted the absence of a premium in Unicredit's offer relative to Banco BPM's recent closing price. The proposed swap ratio does not reflect additional value for Banco BPM's shareholders based on the last trading price before the offer was announced.
Deutsche Bank's stance on Banco BPM remains unchanged despite Unicredit's bid. The analyst's price target of EUR 7.40 suggests a more optimistic valuation of Banco BPM's shares compared to the offer from Unicredit. The current price target implies a belief in the potential value of Banco BPM's various financial activities and assets beyond the banking sector itself.
The market is now observing how Banco BPM's shareholders respond to Unicredit's tender offer. The outcome of this bid will be significant for both banks involved, potentially reshaping their positions in the European banking landscape.
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