By Valentina Za and Andrea Mandala
MILAN (Reuters) -UniCredit has until March to evaluate improving its takeover bid for Banco BPM, CEO Andrea Orcel told an investor call on Wednesday, according to a person who attended the virtual meeting.
UniCredit declined to comment.
With a possible move on Commerzbank (ETR:CBKG) in stand-by due to a political vacuum and a German rule that would force UniCredit to pay in cash if it bid for the rest of Commerzbank within six months of crossing a 5% ownership threshold, Orcel is targeting smaller domestic peer Banco BPM.
Banco BPM has spurned UniCredit's all-share offer saying the 0.5% premium implicit in the stock exchange ratio is unusual and does not reflect the benefits from a merger nor the acquisition of asset manager Anima Holding BPM is carrying out.
BPM has complained UniCredit's move hampers its Anima bid because it prevents it from raising the price without seeking prior shareholder approval given takeover rules in Italy.
Orcel has acknowledged the price of the 10 billion euro BPM bid is close to the market price, adding that other bidders have added a cash element later on.
UniCredit must officially file BPM offer's document with market regulator Consob by mid-December.
At present the offer is non-binding. Once it goes to Consob, the minimum price will be set, while for any increase there is time until March, Orcel told investors.
A second person who listened to the call said Orcel stressed that IT procurement would play a significant role in projected savings from the tie-up. UniCredit is re-internalising parts of its IT services that had been outsourced in the past, and would be able to cut BPM's reliance on external IT suppliers, he said.
The March deadline is linked to UniCredit having called a shareholder meeting on April 10 to approve issuing the shares it needs to pay for the Banco BPM bid.
Orcel, who has set very strict criteria for any merger and acquisition deals, has said in particular he wants to keep the dividend per share "trajectory" broadly unchanged despite the issuance of new shares to finance a deal.
Having restructured under his predecessor and maximised capital generation under Orcel since 2021 as higher rates drove profits to record levels, UniCredit has 6.5 billion euros of cash in excess of self-set minimum capital thresholds it can use to fund its M&A strategy and reward shareholders.
UniCredit's bid implies a 10% discount to Banco BPM's closing price on Wednesday, equivalent to 1 billion euros in value.