(Bloomberg) -- UniCredit SpA has made a surprise new move in the fight to dominate the Italian financial system by unveiling a minority stake in Assicurazioni Generali SpA.
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The Milan-based bank confirmed the purchase on Sunday, following earlier press reports. UniCredit emphasized that its 4.1% stake in Generali is a “pure financial investment,” with no strategic interest in the insurer. Yet the move may provide Chief Executive Officer Andrea Orcel with the tools to advance his primary objective: the acquisition of Banco BPM SpA.
UniCredit began accumulating a stake in Generali as part of its portfolio management in September, long before its bid for Banco BPM and the following wave of Italian dealmaking, said people familiar with the matter, who asked not to be identified. Recent developments have prompted the bank to accelerate its purchases, and Orcel could now leverage the nearly €2 billion ($2.1 billion) stake to play an active role in a complicated web of dealmaking and cross-holdings, using his influence to gain support for his own plans.
M&A Chessboard
Generali finds itself at the heart of a long-standing power struggle among its largest investors, who are themselves also involved in a series of mergers and acquisitions that could reshape Italy’s financial industry: the Milan-based investment bank Mediobanca SpA on one side, and the billionaire families of the late patriarch Leonardo Del Vecchio and Francesco Gaetano Caltagirone on the other.
The two clans are also major investors in Banca Monte dei Paschi di Siena SpA, the state-backed lender that’s seeking to take over Mediobanca. The success of the bid would finally allow Giorgia Meloni’s government to realize its vision of creating a third major Italian banking group. A previous plan to combine Monte Paschi with Banco BPM was hampered by UniCredit’s unsolicited bid for the latter, to Rome’s irritation.
While Generali itself is not an active party in the M&A chessboard, its investors alongside the Italian government have two other key developments they are closely monitoring.
Generali’s board of directors decided last week not to compile a list of candidates for election to the governing body, raising pressure on shareholders to renew the firm’s leadership. Caltagirone, a construction tycoon, has repeatedly sought to influence the insurer’s strategy and clashed with its senior management in the past.
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There is also Generali’s recent deal with Natixis Investment Managers, which would create the second-largest asset manager in Europe, sparking concerns in Rome about rising French influence over Italy’s financial sector. Some members of Generali’s board, backed by Caltagirone, have voiced opposition to the deal.
The Italian government is exploring ways to ensure Italy maintains a strong influence in the partnership, Bloomberg reported previously. One major issue is that the Trieste-based firm is one of the biggest holder of Italian sovereign bonds, people familiar with the thinking in Rome have said.
Power Brokers
In the wave of consolidation in Italy’s banking sector, the two billionaire families — Del Vecchio and Caltagirone — have emerged as critical power players. Together, they wield approximately €15 billion ($15.5 billion) of financial services investments in Italy, and plan to make their voices heard as merger activity accelerates.
The cross-holding of Italy’s financial sector will now become even more intertwined with UniCredit’s holding in Generali.
UniCredit remains focused on a bid for Banco BPM and the investment in Germany’s Commerzbank AG, along with the execution of its business plan, it said in a statement on Sunday. Generali declined to comment to Bloomberg on the investment by Orcel’s bank and a spokesperson for UniCredit declined to comment further on the wider implications of the move.
UniCredit has no shares in Mediobanca, people familiar with the matter said, in response to an earlier report by daily newspaper La Repubblica saying the lender had built a position of less than 3% in the rival bank.
Still, with this latest move in Generali, Orcel continues to surprise investors and stakeholders alike. The executive has made clear he won’t seek to acquire Commerzbank at all costs and also said the terms of the offer for Banco BPM are a “fair starting point.” As Sunday’s announcement shows, his next move is hard to predict.
--With assistance from Tommaso Ebhardt.
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