By Elvira Pollina and Valentina Za
MILAN (Reuters) -Some UniCredit board members are seeking greater clarity from CEO Andrea Orcel on his M&A plans and have asked him to explain the way forward, two sources said, after a spat with Rome delivered another setback to his ambition to grow.
Months into a multi-strand acquisitions strategy, some board members are pressing Orcel for the guidance as a bid for smaller rival Banco BPM hangs in the balance, the sources with knowledge of the matter said, speaking on condition of anonymity ahead of a Sunday board meeting at Italy’s second-largest bank.
UniCredit, which reports quarterly earnings on Monday, declined to comment. The bank’s board gets regular updates from the CEO on his merger and acquisition strategy, a third person close to the matter separately said.
Orcel, who built his reputation as a dealmaker over a three-decade career in investment banking, retains the confidence of investors who have seen UniCredit shares rise six-fold since he joined in 2021. But he finds himself in a tricky spot as his two big M&A plays for Germany’s Commerzbank and BPM make little headway.
Orcel has placed UniCredit at the heart of the consolidation wave sweeping Italian finance with a 14 billion euro ($16 billion) all-share offer for BPM and after buying 6.7% of insurer Generali, which UniCredit has said is a financial investment, like a 28% stake in Commerzbank.
The BPM bid angered Rome, which had alternative plans for the lender and last month imposed conditions UniCredit must meet to proceed. UniCredit has said those prescriptions could be harmful and force it to shelve the bid.
The stalemate with the government has created an unusual level of uncertainty around a bid process far advanced. The BPM offer started last week and BPM investors can tender their shares until June 23.
Orcel also clashed with Germany’s government when he acquired the Commerzbank stake and called for a full merger, before saying he was pausing the process until at least 2026.
BARGAINING POWER
Orcel then built up this year a stake in Generali.
In a move that boosts its bargaining power in an increasingly complex web of interconnected Italian M&A deals, the Milan-based bank used that 6.7% stake to weigh in at a shareholder vote on April 24 on Generali’s new board and CEO.
UniCredit backed a dissenting shareholder, who is a close ally of Prime Minister Giorgia Meloni, in his bid to appoint up to six Generali board members and sink a proposed asset management deal with France’s Natixis.
The government has shown no sign it will soften its stance.
Orcel has repeatedly said he is ready to ditch deals if they do not meet his bar of returning at least 15%.
Rome made that harder when it used ‘golden power’ rules designed to protect strategic assets to approve the BPM bid. Alongside other conditions, the government said UniCredit must cease operating in Russia within nine months, which would need a green light from Moscow.
Orcel fell out with Italy’s previous government when he decided against a deal in late 2021 to buy MPS, a nationalised bank Rome was trying to sell and more recently wanted to merge with BPM.
He has failed to repair relations with Meloni’s government, which is yet to respond to the objections UniCredit raised over its demands.
Despite the difficulties Orcel enjoys support from investors. Two shareholders told Reuters this week they backed his approach.
“It’s too early to judge where Orcel’s M&A strategy is headed. His track record tells us he knows what he is doing, so I expect he will get where he wants to,” said Andrea Scauri, a portfolio manager at Luxembourg-based Lemanik Asset Management.
($1 = 0.8882 euros)
(Reporting by Elvira Pollina and Valentina Za; Editing by Tommy Reggiori Wilkes and Elaine Hardcastle)
