UniCredit buys Italian rival


UniCredit buys Italian rival
Italian bank UniCredit has agreed to buy its smaller rival Capitalia in a move which will create Europe's second largest bank by market value.

UniCredit is to pay 1.12 of its shares for each Capitalia share in a deal worth just under €22 billion (£15 billion) according to the former's closing share price on Friday.

A statement issued by the boards of the two banks after they concluded the deal yesterday described the transaction as "a unique opportunity to consolidate two leading banking groups in a key core market which enjoys a positive growth outlook".

In addition to enhancing the competitive position of both institutions in the Italian market the merger will also keep Capitalia, the country's third-largest bank, out of the hands of foreign investors at a time of increasing consolidation in the banking sector.

UniCredit and Capitalia say the move will also boost their global presence in areas such as asset management and investment banking.

The combined bank will have some 9,200 branches worldwide and more than 40 million customers.

Its shareholders are expected to benefit from pre-tax savings of more than €1.2 billion (£0.82 billion) from 2010, about 68 per cent of which will relate to cost savings.

Merging UniCredit with Capitalia is also likely to involve a one-off pre-tax restructuring charge of €1.1 billion (£0.75 billion), the banks said.

At a press conference in Rome following the announcement UniCredit chief executive Alessandro Profumo said that the deal made "strong business sense".

Mr Profumo is to remain in charge of the enlarged group following the merger, which will also see the company retain its UniCredit name.

The deal is expected to be completed by the last quarter of 2007, following shareholder approval.

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