UniCredit, led by CEO Andrea Orcel, has formed a strategic partnership with Alpha Bank, marking a significant development in the European banking sector post-financial crisis. The merger, reported today, involves UniCredit investing €300 million to combine its Romanian operations with those of Alpha Bank, leading to the creation of the third-largest bank in Romania. This move is expected to boost UniCredit's net profit by €100 million.
Alpha Bank will retain a minor 9.9% share in the new entity, while UniCredit will control the majority stake. As part of the merger agreement, Alpha Bank is set to receive a cash consideration of €300 million (USD1 = EUR1.0625), subject to post-due diligence adjustments.
The transaction was valued at 1.2-1.3 times of Alpha Bank's net assets, resulting in an estimated valuation of between €500 million and €550 million. This valuation was reported by Ziarul Financiar and detailed in presentation materials.
In addition to this merger, UniCredit has announced plans to acquire a 9% stake in Alpha Bank from the Greek state, valued at approximately €270 million. If its bid to the Hellenic Financial Stability Fund (HFSF) fails, UniCredit has prepared a contingency plan to strengthen its presence in the Greek banking sector through open market acquisition of up to 5% of Alpha's shares over two years.
This unexpected transaction was exclusively advised by JPMorgan (NYSE:JPM) and signifies a major step forward for both banks.
InvestingPro Insights
Drawing from InvestingPro's real-time data and valuable tips, it's clear that UniCredit and Alpha Bank's strategic partnership is a significant move in the banking sector.
InvestingPro Tips highlight that UniCredit (0RLS) has been aggressively buying back shares and its revenue growth has been accelerating. This aligns well with the company's current strategic acquisitions. Furthermore, despite some analysts revising their earnings downwards for the upcoming period, the company has consistently increased its earnings per share, which is a positive sign for investors.
On the other hand, Alpha Bank (ACBr) has been experiencing some volatility in its stock price movements, and analysts predict that the company will be profitable this year. However, it's important to note that the bank has been burning through cash quickly, which could be a concern for investors.
From the InvestingPro Data, UniCredit boasts a market cap of $43940.04 million and a low P/E ratio of 4.7 as of Q3 2023. The company has also seen impressive revenue growth of 53.92% over the last twelve months as of Q3 2023. Alpha Bank, on the other hand, has a smaller market cap of $3667.87 million and a higher P/E ratio of 7.35 as of Q2 2023. The bank has experienced a substantial revenue growth of 158.15% over the last twelve months as of Q2 2023.
In conclusion, both banks have their strengths and potential areas of concern. It's recommended for investors to further explore these metrics and additional tips available on InvestingPro platform.
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