European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

CreVal - Crédit Agricole: Grounds for an Improved Offer

Southern Europe Banks: Focus on Italian Banks M&A

Credit Agricole/CreVal: Purchase Obligation

Event-Driven

On 23 November, <a href="https://www.smartkarma.com/entities/credit-agricole-sa" target="_blank" data-smartkarma-citation="entities:21373:1" rel="noopener">Credit Agricole Sa (ACA FP)</a> , through its Italian subsidiary, launched a voluntary public tender offer entirely in cash for all ordinary shares of <a href="https://www.smartkarma.com/entities/credito-valtellinese-spa" target="_blank" data-smartkarma-citation="entities:21175:1" rel="noopener">Credito Valtellinese Sc (CVAL IM)</a> at €10.50 per share.
<ul>
<li>The offer is addressed to the remaining 90.15% shares of Creval that Crédit Agricole does not already own, for a total amount of €664.39 mn.</li>
<li>Valuing the total equity of Creval at c. €736.57 mn. (for comparison, Crédit Agricole's market cap is €28.5 bn).</li>
<li>Representing 22.8x P/Forward EPS, and 0.43x P/TBV.</li>
</ul>
Creval closed on 26 November at €11.5.
<ul>
<li>8.7% above Crédit Agricole's offer and 0.47x P/TBV.</li>
<li>which indicates that the market expects a sweetened bid.</li>
</ul>
The Board of Directors of Creval issued a press release on 25 November calling the offer "unexpected and unsolicited", and indicating that it will hire financial and legal advisors.
<ul>
<li>Of course this should be read as "the offer is too low".</li>
</ul>
The offer seems a tad opportunistic on the back of cheap bank valuations, to which ECB's negative-interest rates policy and the fact that banks aren't allowed to distribute dividends are contributing.
The median target price on Capital IQ is €10.45, so the offer at €10.50 seems bang on, but Creval's Board has signalled it considers the offer too low. The stock is no longer trading on fundamentals, but the bid price will act as support.
<ul>
<li>I believe in the end shareholders will likely accept a sweetened offer, which could come at around €12.0 per share, a 38% premium and c. 0.49x P/TBV, which does not sound excessive.</li>
</ul>

On 23 November, Credit Agricole Sa (ACA FP) , through its Italian subsidiary, launched a voluntary public tender offer entirely in cash for all ordinary shares of Credito Valtellinese Sc (CVAL IM) at €10.50 per share.

The offer is addressed to the remaining 90.15% shares of Creval that Crédit Agricole does not already own, for a total amount of €664.39 mn.
Valuing the total equity of Creval at c. €736.57 mn. (for comparison, Crédit Agricole's market cap is €28.5 bn).
Representing 22.8x P/Forward EPS, and 0.43x P/TBV.

Creval closed on 26 November at €11.5.

8.7% above Crédit Agricole's offer and 0.47x P/TBV.
which indicates that the market expects a sweetened bid.

The Board of Directors of Creval issued a press release on 25 November calling the offer "unexpected and unsolicited", and indicating that it will hire financial and legal advisors.

Of course this should be read as "the offer is too low".

The offer seems a tad opportunistic on the back of cheap bank valuations, to which ECB's negative-interest rates policy and the fact that banks aren't allowed to distribute dividends are contributing.
The median target price on Capital IQ is €10.45, so the offer at €10.50 seems bang on, but Creval's Board has signalled it considers the offer too low. The stock is no longer trading on fundamentals, but the bid price will act as support.

I believe in the end shareholders will likely accept a sweetened offer, which could come at around €12.0 per share, a 38% premium and c. 0.49x P/TBV, which does not sound excessive.


Creval - Crédit Agricole: Playing Hard to Get

Credito Valtellinese SpA

Creval - Crédit Agricole: Playing Hard to Get