Italian banking group UniCredit offered to buy its domestic rival, Banco BPM, for approximately 10 billion euros ($10.5 billion). According to reports, this would result in the two largest banks in Italy merging with each other. The deal will create an important player in the European banking sector. UniCredit priced its offer at 6.657 euros per Banco BPM share, a modest premium over its closing price of 6.644 euros on Friday. 

The agreement is a cash-and-share deal, though UniCredit has indicated that the acquisition would form part of its overall capitalizing strategy, based on its position as the leading pan-European banking group. It follows a series of high-profile mergers and acquisitions in the European banking industry-an industry long in line for consolidation. The deal comes at a strategic point in consolidating the European banking space, with cash-rich acquirers such as UniCredit often cited among potential buyers. 

That is yet another indication that UniCredit is raising its stakes in the effort to escalate its business in foreign lands. The bank had, in September 2024, hiked its stake in Germany’s Commerzbank to 21% and applied for leave to raise it up to 29.9%. However, this takeover attempt was stalled by the German government, which did not want Commerzbank to be taken away as a hostile takeover. The German government is the biggest owner of Commerzbank at 12%. 

Banco BPM, for its part, has also been quite active in the M&A space. In this month alone, the bank has made an offer to acquire asset manager Anima for 1.6 billion euros. Apart from acquiring Anima, the bank has also acquired 5% interest in state-owned Monte dei Paschi di Siena (MPS) as part of its expansion plan. 

Italian bank UniCredit reported the latest quarter’s results wherein it has seen an increase in earnings of 8% on a year ago basis amounting to 2.5 billion euros or $2.25 billion-a-far cry above analysts’ expectations. 

This impressive performance is one reason why UniCredit still feels comfortable in seeking large acquisitions. However, the bank also increased its full-year net profit to surpass that of 8.5 billion euros with more than 9 billion euros. Shares in UniCredit are up about 55% in 2024 as investors show optimism over the strategic direction undertaken.