Intesa stock price erases losses as the bank attempts to close UBI deal

Shares of Intesa Sanpaolo (BIT: ISP) have managed to recover and erase the morning gap lower by pushing higher in the afternoon to trade and close in the green. In the meantime, the banking giant has continued to work to close the deal to buy UBI Banca (BIT: UBI).

Fundamental analysis: Intesa to sell assets to rival BPER

Intesa Sanpaolo is working around the clock to clear antitrust hurdles and close the deal to takeover UBI Banca. The Milano-based bank has agreed to sell more branches and assets to rival BPER (BIT: EMII) bank in a bid to overcome competition objections from the regulatory agencies. 

Last week, Invezz reported that the European Central Bank (ECB) approved the takeover of UBI after Intesa agreed to buy its rival in February for €4.9 billion. 

“The combined Group’s profitability will benefit from expected run-rate pre-tax synergies of €730 million per year, €680 million by 2023 and a further €50 million by 2024, of which €510 million from costs (equal to around 5% of the combined Group’s 2019 pro-forma costs) and, taking revenue attrition into account, €220 million from revenues (equal to around 1% of the combined Group’s 2019 pro-forma revenues),” Intesa said.

However, the Italian Competition Authority (ICA) fears the UBI deal would create or strengthen Intesa’s dominance in several areas. As a result, Intesa has moved to sell 532 branches to BPER.

“The pricing has been slightly improved for BPER and currently its maximum cash-out should be 640 million euros, well below the maximum 1 billion euro capital increase approved by its extraordinary general meeting,” Kepler Cheuvreux said. 

Reuters reported earlier today that BPER is seeking to raise 600-700 million euros in a new share issue to finance a deal to buy branches and assets from Intesa Sanpaolo.

Technical analysis: Buyers recover earlier losses

Intesa stock price has recovered from this morning’s gap lower to close the day in the green. Still, shares of the banking giant fell 8.5% last week to record the worst week since March.

This is likely to be a reaction to the test of the horizontal resistance (the purple line), which obviously failed. This level – 1.80 – is a key area of the bulls and bears. A sustainable move above this zone would open the door for much higher levels with the buyers eyeing a move to 2.00 next.

Summary

Intesa Sanpaolo agreed to sell 532 of its branches to BPER bank in a bid to clear antitrust objections and close the deal to buy UBI Banca. Shares closed 8.5% lower last week while the bulls managed to erase losses from this morning and close the session in the green.