Reuters: Deals: Unipol expects shareholders to back Fondiaria merger

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Unipol expects shareholders to back Fondiaria merger Mar 16th 2012, 12:59 By Stephen Jewkes MILAN | Fri Mar 16, 2012 8:59am EDT MILAN (Reuters) - Italian insurer Unipol (UNPI.MI) said its shareholders are fully behind management plans to merge with peer Fondiaria SAI (FOSA.MI) in a 1.7 billion euro ($2.22 billion) deal that will create Italy's No. 2 insurer. "The board examined the (merger) plan yesterday. We have full and total support for the project. We expect full backing from shareholders," Unipol Chairman Pierluigi Stefanini said in a conference call on Friday. Unipol, controlled by cooperative-owned holding Finsoe, agreed in January to a deal brokered by top investment house Mediobanca (MDBI.MI) to save loss-making Fondiaria in a four-way merger involving a series of capital increases. Media reports have said that some of the cooperative shareholders of Unipol are unhappy at having to stump up their share of the cash for a capital increase of 1.1 billion euros. "Some of the smaller more cash-strapped cooperatives are unhappy about the whole thing," a source close to the matter said. The Unipol plan has been challenged by a competing bid from private equity funds Palladio Finanziaria - a regional player with clout in Italy's North-East - and Sator, founded by Italian turnaround banker Matteo Arpe. The bid of Palladio and Sator, who together own 8 percent of Fondiaria, envisages a capital increase of 450 million euros in Premafin but no merger. Unipol has said its bid will not go ahead unless market regulator Consob waives the need for a mandatory bid on minority shareholders. "I have a good idea of what the share swap ratios should be to be in the interest of Unipol. If there is no understanding on the ratios the deal is off," Unipol CEO Carlo Cimbri said on Friday. ANTITRUST CONCERN A takeover by Unipol, Italy's No.3 insurer by premiums, would create a company with 32 percent of Italy's non-life insurance sector and 37 percent of its motor insurance business. Cimbri said the group's merger plan was based on the fact that the new group would not be allowed, by the antitrust, to exceed a market share of 30 percent in each Italian province. The new combined entity will target non-life premiums of 10.5 billion euros in 2015 while synergies will be 335 million euros by 2015, Unipol said. "We see a dividend payout (for the new group) between 60 and 80 percent," Cimbri said in a conference call with analysts. Shareholders of Fondiaria and Unipol are due to meet on Monday to vote on two capital increases of 1.1 billion euros each. Earlier on Friday Fondiaria, controlled by debt-laden Premafin (PRAI.MI) said it posted a loss of 1.03 billion euros in 2011 after losing 929 million euros the year before. It said its solvency ratio - a measure of an insurer's capital - was 78.2 percent at the end of 2011, well below the 100 percent level that sets alarm bells ringing. But it added that thanks to the recovery of the financial markets it was close to 90 percent on March 8. ($1 = 0.7651 euros) (Editing by Erica Billingham) Link this Share this Digg this Email Reprints

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