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UniCredit S.p.A and Alpha Services and Holdings S.A. have announced a strategic partnership that includes merging their Romanian subsidiaries, UniCredit Romania and Alpha Bank Romania. The merger, set for completion by 2024, will form the third largest bank in Romania with a combined 12% market share in both corporate and retail segments.
As part of the agreement, Alpha Bank will retain a 9.9% stake in the merged entity and receive a cash consideration of €300 million ($344 million). This move is expected to modify UniCredit’s CET1 ratio by approximately 15 basis points, without significantly influencing it through the acquisition of Alpha’s stake. This is in line with InvestingPro Tip for UniCredit that the management has been aggressively buying back shares. Also, according to InvestingPro data, UniCredit has a healthy market cap of 41484.85M USD and a P/E Ratio of 5.07, indicating a strong financial position.
In addition to the merger, UniCredit has submitted an offer to purchase all shares held by the Hellenic Financial Stability Fund (HFSF) in Alpha, which represents a 9% stake. If this offer is not accepted, UniCredit plans to buy up to a 5% equity stake from the open market. This is consistent with the HFSF’s divestment strategy and InvestingPro Tip that Alpha Services and Holdings is trading at a low earnings multiple with a P/E Ratio of 6.45, as per InvestingPro data.
The partnership expands beyond Romania and into Greece. UniCredit will acquire a 51% stake in AlphaLife Insurance Company, leading to a joint venture focusing on pension-saving products. This acquisition enables UniCredit to distribute its bancassurance and asset management products to Alpha Bank’s 3.5 million clients. It’s worth noting that Alpha Bank has been profitable over the last twelve months, as per InvestingPro Tip.
The strategic partnership aims to enhance UniCredit’s presence in Romania and Greece, capitalizing on trade and tourism connections. It also supports Alpha Bank’s business plan targets. The merger is projected to add over €100 million ($115 million) in incremental net profit for UniCredit without altering Alpha Bank’s net profit expectations. This aligns with the InvestingPro Tip that UniCredit’s revenue growth has been accelerating, supported by a revenue growth of 48.23 % according to InvestingPro data.
CEOs Andrea Orcel of UniCredit and Vassilios Psaltis of Alpha Services and Holdings are set to host a call discussing the details of this partnership. For more insights like these, consider subscribing to InvestingPro which offers numerous additional tips and real-time metrics to guide your investment decisions.
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