Crédit Agricole proposes Banco BPM merger, 20% premium and €1 bln dividend

Crédit Agricole proposed merging its Italian unit into Banco BPM, a deal that would lift its stake in the Milan-listed lender to about 45% from 29.6% without a mandatory takeover offer, and offered Banco BPM shareholders a 20% valuation premium and a €1 billion special dividend.

The proposal, which Crédit Agricole described as friendly, was submitted to Banco BPM’s board for evaluation. It seeks talks on a merger between Banco BPM and Crédit Agricole Italia, with the legal structure to be defined among the parties.

Crédit Agricole said the 20% premium reflects the value placed on Banco BPM relative to the estimated 2027 price-to-earnings multiple used to value the businesses Crédit Agricole would contribute. 

The €1 billion dividend would be paid to Banco BPM’s current shareholders in addition to the exchange ratio.

The deal would need approval from Banco BPM’s extraordinary shareholder meeting by the majority required for the so-called "whitewash" procedure, which would exempt Crédit Agricole from having to launch a mandatory tender offer. 

A merger needs the backing of at least two-thirds of the capital represented at the meeting.

The exemption also depends on no dissenting vote from a majority of the shareholders present, other than Crédit Agricole and any shareholder or group holding a relative majority above 10%.

Crédit Agricole said the deal could be completed in the second half of 2027.

Crédit Agricole estimated the deal would raise Banco BPM’s earnings per share by about 24% in 2027, citing the premium offered and synergies.

It put the expected synergies at €800 million a year, and said the 24% estimate is based on those pre-tax, run-rate synergies.

Crédit Agricole said the combined company would be Italy’s third-largest banking group, serving 6.5 million customers through more than 2,300 branches. It would be built around Banco BPM and remain listed in Milan.

Banco BPM’s current chief executive would be confirmed as CEO, and the board would continue to have a majority of independent members. It would also include Crédit Agricole’s Italian life and non-life insurance businesses.