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UniCredit, Capitalia Merger Deal Seen at Weekend


The boards of UniCredit and Capitalia may meet as early as Sunday to approve a deal that would create the euro zone's largest bank by market value, Italian newspapers said on Thursday.

Two Capitalia board sources, however, denied board members had been put on alert for a weekend meeting and said a meeting called for Monday was the only one they were aware of.

Capitalia can call an extraordinary board meeting 48 hours ahead of the event, so a Sunday meeting can be called up to Friday. UniCredit has no such time constraints, its by-laws showed.

Sources familiar with the situation have told Reuters that the two banks, which confirmed on Tuesday they were in merger talks, were aiming for a deal as early as next week.

Italian daily Corriere della Sera said a merger announcement was possible on Monday, when Capitalia is to hold a meeting of its key investors before a regular board meeting.

There was no deal yet on the price, several papers reported.

"A board meeting at the weekend is not unlikely, but there is no confirmation yet," said a source familiar with the situation.

The Monday afternoon Capitalia board meeting is mainly set to discuss governance issues related to a new law, but will also discuss the merger, one Capitalia source said.

Analysts expect a friendly, all-share offer by UniCredit that would create a bank with a combined market worth of about 100 billion euros ($136 billion), with only Britain's HSBC ahead of it among European banks.

UniCredit is seen offering a little bit more than one of its shares for each Capitalia share, in line with the current market value of the two banks' shares.

A deal would come only a year and a half after UniCredit took over Germany's HVB in a $21 billion deal and amid booming banking consolidation in Italy and Europe. The HVB deal allowed UniCredit to enter Germany, Europe's largest economy, and made it the number one bank in central and Eastern Europe.

UniCredit and Capitalia declined to comment.

Merrill Lynch is advising UniCredit on the deal. Capitalia Chairman Cesare Geronzi has appointed ex-Goldman Sachs banker Claudio Costamagna. Citigroup, Credit Suisse and Rothschild were also advising Capitalia on the deal, financial sources told Reuters.

Profumo to Lead

UniCredit Chief Executive Alessandro Profumo is expected to lead the new bank, while Geronzi will be deputy chairman, newspapers and analysts have said.

It was unclear what role Capitalia CEO Matteo Arpe would have at the bank, with one Capitalia source saying the deal could herald the exit of the ambitious chief executive who spearheaded a turnaround of the bank in recent years.

The future of Capitalia, which analysts view as the most attractive Italian bank still on the market, had been uncertain for months due to a bitter struggle between Geronzi and Arpe, even though senior Italian bankers had told Reuters the two would make an ideal match.

Analysts and bankers have said a hurdle to the prospective tie-up was the two banks' large stakes in Mediobanca, which would make the new lender the largest shareholder in Italy's best-known merchant bank.

The new bank would have a combined stake of around 18% in Mediobanca, gaining a dominant position that is irking other investors in the merchant bank, bankers have said.

But newspaper Il Sole 24 Ore said UniCredit and Capitalia would commit to sell about 9% of their Mediobanca stake.    

Mediobanca has dominated the financial scene in post-World War II Italy. Although its influence is ebbing in the face of strong competition from international competitors, it is still present in most key Italian deals and is the largest shareholder in Italy's number one insurer, Generali.

Shares in Capitalia were flat at 7.89 euros. UniCredit was up 0.08% at 7.52 euros, pointing to a share swap ratio of 1.05 UniCredit share to each Capitalia share.