Intesa Says Possible Generali Bid Is Just One of Many Options Being Eyed

February 3, 2017 by and

Intesa Sanpaolo SpA said it’s weighing a potential takeover of Assicurazioni Generali SpA and described a possible bid as a “case study” that is only one of many options the Italian bank is considering.

The Turin-based bank responded in a statement on Friday to press reports that a bid is in the works. It reiterated a Jan. 24 statement that confirmed it’s considering an industrial combination with Generali and a spokesman ruled out an all-share offer for the time being.

This is “part of the various analyses that the bank’s management regularly carries out about the group’s options for growth, both internal and external,” according to the statement.

A merger of Intesa, which reports earnings on Friday, and Generali would reshape Italy’s financial industry by combining the country’s second-biggest bank with its largest insurer. Italian newspaper Il Messaggero reported last week that the main option under consideration is an offer of 3 billion euros ($3.2 billion) of cash and 12 billion euros of stock.

“The statement has two explanations: they are effectively playing down a deal or they don’t want to be front run by the market before making an offer,” said Jacopo Ceccatelli, head of Marzotto SIM SpA, a Milan-based broker-dealer. Intesa wants to avoid a hostile move that risks boosting Generali’s share price, La Stampa reported, without citing anyone.

Intesa earlier this week rejected a report that its board is set to discuss a bid over the coming weekend and said its executives will not review any offer for Generali during a meeting called Friday to approve 2016 earnings.

It’s the bank’s duty to consider growth opportunities, especially in private banking, insurance and asset management, Chief Executive Officer Carlo Messina said in remarks at an event last week. Without mentioning Generali specifically, he said the acquisition of an insurance business would make sense for the bank only if it can be integrated with its network.

In a defensive move, Generali bought 3 percent of Intesa shares following the initial press reports of a bid. The purchase means Intesa’s voting rights would be frozen at 3 percent regardless of the size of the stake. The only way around the limit would be to make an offer for at least 60 percent of Generali.

A combination of the two companies would revive a joint-business model known as bancassurance that was largely dropped after some high-profile deals produced poor results. Companies had sought benefits from cross-selling their products through their offices and branches.

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