By Mauro Orru
Credit Agricole SA's recently launched bid for its Italian subsidiary to take over Credito Valtellinese SpA is facing resistance from some Credito Valtellinese shareholders, amid concerns the current offer undervalues the Italian bank.
Petrus Advisers Ltd., shareholders of Credito Valtellinese, said Wednesday in a letter addressed to the board of directors and chief executive of the Italian bank that it wouldn't tender its shares as Credit Agricole Italia SpA's current offer of EUR10.50 a share is inadequate.
"After conducting a range of different valuation scenarios, we believe that the offer of EUR10.50 per share is inadequate, as it is opportunistic in nature and significantly undervalues Credito Valtellinese," Petrus Advisers said in the letter.
The London-based investment firm said it estimates the fair value of Credito Valtellinese on a standalone basis to be in excess of EUR14.00 a share and called on the board to appoint financial advisers for a "careful review of all strategic alternatives, including the unsolicited offer from Credit Agricole among others."
Credit Agricole launched its offer on Monday for an investment of EUR737 million, a 21.4% premium to Credito Valtellinese's spot price as of Nov. 20.
Petrus Advisers said such a premium is much lower than the average premium of about 25%-35% for comparable M&A transactions in Italy, also warning the current offer granted disproportionate benefits to Credit Agricole.
Credit Agricole said Monday that it expected the deal to be accretive to its earnings per share by 2022, while the preliminary estimated negative impact on its common equity tier 1 ratio is projected to remain below 20 basis points on completion.
The French bank also said Credit Agricole Italia would submit the tender offer document to Italian market regulator Consob by the first two weeks of December 2020, with settlement slated for May 2021.
Write to Mauro Orru at email@example.com; @MauroOrru94
(END) Dow Jones Newswires
November 26, 2020 05:00 ET (10:00 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.