The GENERALI deal: Background preparations expecting the first overt moves

23 February 2017 — Daniela GHETU
"No request to date from insurer GENERALI for a seat on the Intesa board," says Intesa Sanpaolo Chairman Gian Maria GROS-PIETRO, Reuters reports. The statement follows to the recent acquisition by GENERALI of a 3.04% participation in Intesa Sanpaolo, which makes the Trieste Lion the fourth shareholder of the largest Italian bank.

In the context created by the rumored acquisition of the Italian leading insurer by Intesa, GENERALI said on February 17, it had bought 510 million shares in Intesa Sanpaolo equal to a 3.04% stake, effectively blocking the lender from acquiring a large stake in itself. At Friday's closing price, the 3.04 percent stake in Intesa is valued at around EUR 1.1 billion. The stake acquisition replaces a 3% holding in Intesa that GENERALI had taken through a securities lending transaction last month. The insurer said that it had launched the process to terminate that securities transaction. According to the Italian cross-shareholding regulations, a company cannot hold more than 3% of another entity's voting rights if the latter already has a stake of more than 3% in the former one. However, the limits would no longer apply should Intesa launch a takeover bid for at least 60% of GENERALI'S share capital.

In response to the market interest, Intesa has said it is studying a possible combination with the insurer in a deal that would create a financial powerhouse with a market value of around EUR 60 billion. Yet, according to Intesa's CEO, Carlo Messina, the bank "will take all the time it needs to evaluate a possible offer on Trieste, which will have to align "with the strategic priorities of the business plan."

Meanwhile, the government looks "carefully" to the events, although according to the Italian PM Paolo Gentiloni, it will refrain from interfering. Yet, it seems that preserving the Italianity of the Trieste financial champion is very important for the country's government as the winged Lion, who hold in its paws EUR 70 billion in government bonds and EUR 470 billion worth of assets under management including policies and funds, remains the last Italian financial pearl of the crown.

Obviously, there is still a long way to go until a clear picture will emerge and the first concrete actions will be taken, even if - according to a recent piece of the Financial Times -, a first move is to be expected from Intesa by the end of February. Meanwhile, lots of speculations are made on the possible involvement of Allianz in the whole operation, as well as on the role played by Mediobanca, the most relevant of the GENERALI's shareholders. A possible association of the number 3 and 4 of the global insurance market, Allianz and GENERALI, is worth speculating. Yet, the German group's representatives abstained from making any statement on the subject, except for reiterating the Allianz's interest in further growing by new acquisitions.

In Trieste, however, GENERALI's employees started worrying about their jobs. According to the trade union representatives statements for the Italian media, "about half of the current 2,400 jobs in Trieste could be at risk" considering that, in order to strengthen its financial position, the Group's management seems to push ahead for an additional operating costs reduction. This adds to an already witnessed trend, of GENERALI's Milano center increasing its weight in the corporate structure. Milano used to have 70 out 1,000 employees, but in the recent years it has reached 300 out of 1,000 employees, said a trade union representative.

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