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That’s why Creval’s board of directors mumbles about Crédit Agricole’s takeover bid

3 years ago babelfish

That's why Creval's board of directors mumbles about Crédit Agricole's takeover bid

According to the board of Credito Valtellinese, the takeover bid launched by Credit Agricole on Credito Valtellinese “undervalues” Creval. Are you essentially asking for a retouching of the takeover bid? Facts, numbers, comments and scenarios (while in politics there are those who grumble about the French offensive in finance)

Does Creval's board of directors mumble about Crédit Agricole for the French banking group to adjust the price of the takeover bid on Credito Valtellinese?

The takeover bid launched by Credit Agricole on Credito Valtellinese has “a valid strategic value in the project of the potential merger” but at the same time “undervalues” Creval. This is underlined today by the CEO of the Valtellinese institute, Luigi Lovaglio, according to whom the offer, with a price of € 10.5 per share, does not value the bank: "We believe it is right that the distinctive elements of Creval be enhanced, we are extremely solid and we think they are objective, quantifiable factors that have not been adequately taken into consideration in the offer ".

THE BENEFITS OF CREVAL FOR AGRICULTURAL CREDIT

"Credit Agricole and its" other "shareholders could potentially benefit from a total capital buffer of approximately 700 million (even before the conversion benefits of dta), underlines the board of directors of Creval (Credito Valtellinese) in summarizing various elements of value from an M&A perspective that the Valtellina bank “believes should be adequately valued and considered in the takeover bid”. This would be a capital buffer that would be “potentially usable in the implementation of strategic group initiatives”.

HOW TO GET TO CREVAL BUFFER

This buffer is reached by considering the excess capital on a stand-alone basis of over 400 million euros "of the Creval which can count on" a capital indicator significantly higher than the average of the Cet 1 ratio fully loaded of the main Italian listed banks ", and "an additional 280 million euros", "if the Cet 1 ratio fully loaded target declared by Credit Agricole in its 2019-2022 business plan (equal to 11% by 2022) were taken into consideration as a term of comparison".

THE VALUE OF GOODWILL

It is then highlighted that Credit Agricole could benefit from a “significant negative goodwill (goodwill, ed. ) Deriving from the possible acquisition of Creval. The billion "already estimated in advance" by the Banque Verte "could further increase due to" the effect of the registration in the financial statements of the dta "of Credito Valtellinese" currently not registered and equal to approximately 181 million euro ".

WHAT THE FINANCIAL ADVISORS SAY ABOUT THE OPA

The fairness opinions of Credit Agricole's financial advisors in charge of assessing the value of the bank's capital have identified the minimum price of the company as 12.95 euros per share, on the basis of an analytical method. The maximum price would instead be € 22.7 per share. This is what is stated in the issuer's document. The price offered by Credit Agricole is 10.5 euros per share.

WHO ARE THE SHAREHOLDERS OF CREVAL NEGATIVE ON THE AGRICULTURAL CREDIT TENDER OFFER

Five Creval shareholders among institutional investors have made known their negative positions on the price offered by Credit Agricole to buy the bank based in Sondrio. It is, says Creval in the broadcaster's document published in the morning, of Alta Global, Hosking Partners, Kairos, Melqart and Petrus Advisers. They, "as is clear from press reports", "publicly expressed their opinions regarding the inadequacy of the offer consideration, highlighting elements such as the significant capitalization of Creval, the benefits relating to the Dta, the value of the synergies and the progress in 'implementation of the Business Plan ”, underlines the group. Petrus Advisers in particular has published on his website a long presentation on the inadequacy of the price of 10.5 euros offered.
Creval, underlines the board of directors in the note in which it rejects the takeover bid by Credit Agricole, “presents various distinctive and valuable elements in a stand-alone perspective”. First of all, “the high capital position also creates the conditions for a potential strengthening of the dividend policy after the expiry of the current limits set by the ECB until 30 September 2021 with reference to the pandemic crisis.
In fact, Creval “can count on a best-in-class capital endowment in the Italian banking context (Cet 1 ratio at 31 December 2020 of 23.9% on a phased-in basis and equal to 19.6% on a fully loaded basis)”. This equity indicator is “equivalent to an excess of capital of over 400 million euros”.

THE VALUES OF CREVAL ACCORDING TO THE BOARD THAT CRITICAL THE OPA

The board then highlights the "significant improvement in the risk profile in advance of the target set for 2023 by the Industrial Plan". But also the "improvement in operating efficiency with a high reduction in operating costs in the 2020 financial year, in advance of the targets set in the business plan" and the "gradual improvement of commercial activities in support of the objective of sustainable profitability". The board also highlights the potential benefits from the recognition of Deferred Tax Assets (DTA) on a stand-alone basis. "As of December 31, 2020 Creval presents unrecognized dta from tax losses and Ace surpluses for approximately 181 million euros. The income expectations should allow the possibility of recording these dta in future years, for an estimated amount of approximately 30 million on average per year (in the period 2021-2026) ", is summarized in the note.

Again with regard to the tax benefits deriving from the conversion into tax credits of Dta in the context of the possible aggregation between the two banks, the board recalls that "in the Budget Law 2021, published in the Official Gazette on December 30, 2020 (therefore after the announcement of the offer of 23 November 2020), would make it possible to convert into tax credits both the DTAs relating to tax losses and past Ace surpluses of Creval, equal to approximately 249 million euros at December 31, 2020, and of Credit Agricole, equal to approximately 136 million at December 31, 2020. This benefit, significantly higher than that achievable from a stand-alone perspective by the two banks, would amount, net of the related conversion fee and the related tax effect, to approximately 321 million euros and would be achievable – is summarized – almost immediately or in any case in the short term ".

CROSETTO TWEET

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-perche-il-cda-di-creval-borbotta-sullopa-di-credit-agricole/ on Mon, 29 Mar 2021 10:03:37 +0000.