UniCredit's Hostile Takeover Bid of Banco BPM Faces Critical Crossroads Amid Minimal Shareholder Support

The UniCredit-Banco BPM takeover saga has reached a pivotal moment, with an astonishingly low 0.011886% of Banco BPM shares tendered to date—far below the threshold required to complete the hostile all-share bid. As of May 9, 2025, this near-total shareholder rejection underscores the fundamental disconnect between UniCredit’s valuation and Banco BPM’s strategic vision.

The Bid’s Unattractive Terms

UniCredit’s offer, valuing Banco BPM at €13.7 billion, requires shareholders to exchange 0.175 new UniCredit shares for each Banco BPM share. However, this ratio represents a 7–9% discount to Banco BPM’s market price, a gap that has driven shareholders to reject the deal en masse. Banco BPM’s board has condemned the offer as unfair, citing that shareholders would receive only 14% of projected €1.2 billion annual synergies while contributing 18% to the combined entity’s 2027 profits.

Regulatory Overreach Complicates Execution

The Italian government’s “Golden Power” conditions have further strained the deal’s feasibility:
- UniCredit must divest its Russian operations within 9 months, a challenge amid geopolitical tensions.
- It faces a €22.2 billion loan sale deadline in southern Italy by late 2025 to avoid monopolistic scrutiny. Delays risk fines and capital erosion.
- Banco BPM’s loan-to-deposit ratio in the region must remain unchanged for 5 years, limiting flexibility.

These constraints, combined with UniCredit’s obligation to maintain a CET1 capital ratio of 13.2% during divestiture, add layers of operational and financial risk. As of Q3 2023, UniCredit’s CET1 stood at 14.3%, but execution delays or undervalued loan sales could test this buffer.

Market Skepticism and Shareholder Dynamics

The market has reacted sharply to the bid’s flaws. Banco BPM’s shares rose 1.2% post-rejection, while UniCredit’s fell 0.8%, deepening to a 4% dip after regulatory terms were disclosed. The 0.01% tender uptake—far below the required 66% for control—signals shareholder distrust in both the valuation and UniCredit’s ability to navigate regulatory hurdles.

Banco BPM’s CEO, Giuseppe Castagna, has doubled down on its standalone strategy, raising 2025 net profit guidance to €1.95 billion (up from €1.7 billion) and targeting €2.15 billion by 2027. This confidence is reflected in investor sentiment: Banco BPM’s shares now trade at a 0.6x price-to-book premium, while UniCredit languishes at 0.6x discount, a stark valuation divide.

Strategic Crossroads for Both Banks

UniCredit’s bid hinges on gaining Banco BPM’s 170 southern Italian branches to strengthen SME lending. However, the forced loan sales could strip profitability from this key market. Banco BPM, meanwhile, has signaled openness to M&A if UniCredit withdraws its bid—a possibility given its right to exit by June 30.

Outlook and Risks

The next six weeks will be decisive:
- June 23: Tender deadline. A failure to secure sufficient shares could force UniCredit to abandon the bid.
- June 30: UniCredit’s withdrawal deadline. Delayed loan sales or a weakened CET1 ratio may push it to walk away.
- Late 2025: Divestiture deadlines loom, with fines looming for non-compliance.

Conclusion: A Deal Unlikely to Proceed

The math is clear: at 0.01% tender uptake, the bid is effectively dead unless UniCredit revises its terms. The regulatory conditions, coupled with Banco BPM’s robust standalone performance, make the current offer untenable.

For investors:
- Banco BPM appears well-positioned to capitalize on its growth strategy, with its €2.15 billion 2027 net income target supported by strong Q1 results.
- UniCredit, however, faces significant headwinds. Its 0.6x price-to-book discount reflects market skepticism about its execution capability, especially if it must proceed with the merger under current terms.

The most probable outcome is a withdrawal by UniCredit, allowing Banco BPM to pursue its independent path. Should UniCredit proceed, its CET1 ratio and capital management will be under intense scrutiny—a gamble with high stakes for both banks and their shareholders.

In this high-stakes drama, Banco BPM’s shareholders have spoken: the price is wrong. UniCredit’s next move will define its future in one of Europe’s most competitive banking markets.