By Valentina Za and Alvise Armellini
MILAN (Reuters) -Elliott-backed Italian speciality lender Banca CF+ on Monday announced a bid for rival Banca Sistema worth around 145 million euros ($170 million), saying the consolidation wave sweeping the sector made it imperative to build scale.
Banca CF+ said it had struck an agreement with Gianluca Garbi, founder, CEO and leading shareholder of Banca Sistema, who had committed to tendering his 24.9% stake in the lender.
Banca CF+ priced its cash-and-share offer at a discount to Sistema’s closing price on Friday of 1.96 euros a share.
Sistema shares plunged 10.8% on Monday, prompting an automatic trading halt.
Banca CF+ is offering 1.8 euros a share, of which 1.382 euros in cash and 0.418 euros in shares of Kruso Kapital, a Banca Sistema unit active in the pawn business.
Banca Sistema did not immediately respond to an emailed request for comment.
Banca CF+ said in a statement it would merge into Banca Sistema if the offer succeeded, retaining the bourse listing.
A Milan-based trader said the offer had prompted investors to pocket gains on Banca Sistema shares, which were trading at a three-year high, as they could always reinvest in the company at a later stage.
Sistema specialises in financing firms by acquiring their claims towards the public system, a form of speciality credit known as factoring.
It also provides retail credit secured against one fifth of a person’s salary.
Banca CF+ was born from Credito Fondiario, an Italian lender in which U.S. fund Elliott Management first invested back in 2015, raising its stake in 2018 as it built a debt recovery business during the boom years of Italy’s bad loan market.
In 2022, it split the banking business, which became CF+, from the loan recovery operations.
The latter, dubbed Gardant, last year merged with Fortress-backed bad loan manager doValue.
The public exchange offer is the latest in a number of M&A deals in Italy’s banking sector in recent months.
“The Italian banking sector is going through a phase of consolidation.
Even in the segment of specialized banks, there is a need for larger and more efficient operators,” Banca CF+ CEO Iacopo De Francisco said in the statement.
“The integration of Banca CF+ with Banca Sistema allows us to combine skills, technologies and industrial vision to create a more solid and innovative operator, capable of growing in the chosen business segments,” he said.
UniCredit acted as financial adviser to Banca CF+. Law firm Chiomenti as its legal adviser.
($1 = 0.8537 euros)
(Additional reporting by Giancarlo Navach in Milan. Editing by Emelia Sithole-Matarise, Mark Potter and Keith Weir)
