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February 14, 2017

Intesa Said to Sound Out Investors Ahead of Bid for Generali

Source: Bloomberg

By Sonia Sirletti, Tommaso Ebhardt and Manuel Baigorri


(Bloomberg) -- Intesa Sanpaolo SpA is sounding out investors about a possible combination with Assicurazioni Generali SpA and weighing which of the insurer’s assets it might sell, according to people with knowledge of the matter.

Intesa Chief Executive Officer Carlo Messina is seeking support from institutional investors in both companies, and doesn’t plan to make a bid for Generali before collecting a consensus from shareholders, the people said, asking not to be identified because the deliberations are private. As part of the review, the company is evaluating potential buyers for businesses owned by Generali that it wouldn’t want to keep after a takeover, one of the people said.

Messina sounded out some Intesa investors including BlackRock Inc. in London last week as part of a roadshow around the bank’s earnings announcement, the people said. The company has also been speaking to Generali’s shareholders for the past month, one of the people said. Several investors have said they’d be open to a transaction, though Intesa may still be weeks away from making a final decision on whether to proceed, the people said.

Some investors have signaled they’d be open to a bid of more than 17 euros a share, one of the people said. Generali was up 1.6 percent at 15.01 euros as of 10:15 a.m. in Milan, making it the best performer on the benchmark FTSE MIB Index and boosting its market value to 23.4 billion euros ($24.9 billion). Intesa was down 0.4 percent to 2.14 euros and has lost about 14 percent since its interest in Generali was reported.

Intesa is considering a merger with Generali as part of its plan to expand into more fee-generating businesses, such as asset management and insurance. An acquisition may help Messina develop the company’s non-life insurance business and expand abroad through Generali’s network. The bank is determining whether a combination fits with strategic priorities, and will only consider a deal that won’t threaten the bank’s dividend or capital buffer, Messina said Feb. 3.

“It’s good that Messina is consulting with Generali’s anchor investors and with his own shareholders on the strategic opportunities for the bank,” said Mario Russo, an analyst at North Square Blue Oak Ltd. “Before forming a view, investors want to properly understand reasons, synergies and goals of such a deal.”

Asset Sales

Intesa is exploring selling some of Generali’s assets to European insurers, the people said. Allianz SE, Europe’s largest insurer, has weighed a bid for parts of Generali, people familiar with the plans said previously.

Representatives for Intesa, Generali and BlackRock declined to comment.

The Financial Times had previously reported that Intesa was speaking to investors and planned to approach Generali and its core investors in an attempt to reach friendly merger terms.

Following initial press reports that a bid was in the works, Generali bought voting rights equal to a 3 percent stake in Intesa last month. Under Italian rules, the purchase prevents Intesa from accumulating voting rights in the insurer without making a bid for majority control.

Defensive Move

Some of Generali’s largest shareholders, including Mediobanca SpA, supported the insurer’s defensive move, one of the people said. Generali’s Italian shareholders include Luxottica Group SpA’s founder Leonardo Del Vecchio, with about 3 percent, according to data compiled by Bloomberg. Institutional investors own about 32 percent of the company, according to the data. A spokesman for Mediobanca declined to comment.

Generali’s board will meet Wednesday, the second time in a week, with ongoing business on the agenda, Il Sole 24 Ore reported Tuesday, adding that directors may also discuss the holding in Intesa.

“The situation remains uncertain,” Luca Comi an analyst at ICBPI, wrote in a note Tuesday. “In the current environment, it’s likely that Generali shares can continue to benefit from rumors and hypotheses of an offer from Intesa.”

A merger of Intesa and Generali would reshape Italy’s financial industry by combining the country’s second-biggest bank with its largest insurer. A combination of the two companies would revive a joint-business model known as “bancassurance” in which companies seek benefits from cross-selling products.

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