UniCredit posts record quarterly profit as it launches Commerzbank bid
UniCredit's Record Profit and Commerzbank Takeover Attempt
By Valentina Za
UniCredit Launches Takeover Offer for Commerzbank
MILAN, May 5 (Reuters) - Italy's UniCredit beat expectations on Tuesday with its highest quarterly profit on record and raised its full-year forecast, as it launched a takeover offer for Commerzbank despite strong German opposition.
The 35-billion-euro ($41 billion) bid aims to lift UniCredit's stake in the German lender above 30%, from just below that level. Under German takeover rules, that would allow UniCredit from next year to increase its holding further through open-market purchases.
Commerzbank's Response and German Government Backing
Commerzbank has rejected the approach and has the backing of the German government in its fight to remain independent.
"Our presence (as a shareholder) is driving Commerzbank to review everything they need to review ... be more ambitious, change things in a better way, so that can only be positive for everybody," UniCredit CEO Andrea Orcel told CNBC television.
Financial Performance and Profit Forecast
Profit Tops Forecast
PROFIT TOPS FORECAST
Orcel reiterated the offer, which carries a very low premium for Commerzbank shareholders, was not expected to give UniCredit control of Germany's second-biggest lender.
"For UniCredit shareholders it's a win-win. We end up below control, hopefully above 30%, but below control," he said.
Quarterly Results and Revenue Drivers
UniCredit's net profit for January-March rose 16% year-on-year to 3.2 billion euros ($3.7 billion), well above an analyst consensus estimate provided by the bank of 2.7 billion euros.
The bank said revenues were supported by a tripling in dividends from financial investments made under Orcel's multi-pronged mergers and acquisitions strategy, offsetting the drag from lower interest rates.
Bringing the life insurance business in house also lifted revenues, UniCredit said.
Investment Strategy and Future Outlook
Orcel, a veteran investment banker at the helm since 2021, has yet to clinch a merger deal despite several attempts. He has instead built stakes in rival institutions including Commerzbank, Greece's Alpha Bank and Italian insurer Generali.
UniCredit said it booked around 400 million euros in dividends from its equity investments.
It now targets a net profit of 11 billion euros or more this year, up from a previous forecast of "around" that level.
($1 = 0.8551 euros)
(Reporting by Valentina Za. Editing by Harikrishnan Nair and Mark Potter)
