Maximize the Value, GO for Dah Sing

Intesa Sanpaolo launches €4.9bn bid to buy Italian banking rival UBI Banca

Intesa Sanpaolo, Italy’s biggest domestic lender, has launched a €4.86bn ($5.26bn) takeover bid for its rival UBI Banca in an audacious attempt to kick-start consolidation in Italy's fragmented banking sector.

If successful, the combination would create the seventh-largest bank in the eurozone with €1.1tn in assets. It would also give Intesa an additional 3m retail, small business and private-banking clients, the company said.

Intesa has offered to pay 17 new shares for every 10 UBI Banca shares tendered. It said the bid corresponds to a value of €4.25 per share in UBI Banca, or a 27.6 per cent premium to the Bergamo-based lender’s share price at the end of last week.

Tuesday’s spike in UBI Banca’s share price has hit a number of big-name hedge funds that have been betting against the shares.

London-based Marshall Wace, which manages around $45bn in assets, has been running the largest position, with a short position of 2.2 per cent of the bank’s shares, according to regulatory filings.

However, the hit is not as painful as it might have been. Funds have been cutting their bets as UBI Banca’s share price has risen. The number of shares out on loan — which indicates short-selling activity — is at its lowest level in more than two years, according to IHS Markit. It stands at 7.4 per cent, having risen above 12 per cent in August.