UPDATE 1-Italy’s Intesa launches surprise $5.3 bln takeover bid for rival UBI

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FILE PHOTO: Intesa Sanpaolo bank logo is seen at the headquarters during shareholders meeting in Turin, Italy, April 27, 2017. REUTERS/Giorgio Perottino

MILAN (Reuters) – Intesa Sanpaolo (ISP.MI) on Monday kicked off long-awaited consolidation among Italian banks with a surprise 4.86 billion euro ($5.3 billion) takeover bid for smaller rival UBI Banca (UBI.MI).

Intesa said it would offer UBI shareholders 17 newly issued Intesa shares for every 10 UBI shares tendered to create a European-sized player focused on wealth management and insurance, managing more than 1.1 trillion euros in customers’ financial assets.

“The banking sector is heading for consolidation in the coming years … it is in Intesa’s interest to reach a size that will allow it to compete … in Europe,” Intesa said in a statement.

The bank said it had picked UBI because it was very well managed and had a similar business model, so as to minimise integration risks.

UBI had no immediate comment. A source close to Intesa said the move had not been previously agreed but was not hostile.

UBI is Italy’s fifth-largest bank and the strongest among second-tier lenders. It had long been tipped to play a prominent role in an expected wave of mergers among mid-sized Italian banks.

Intesa said the exchange offer valued UBI shares at 4.254 euros each. UBI shares closed up 5.5% on Monday at 3.491 euros each after the bank presented a new three-year plan.

If the offer is successful Intesa will delist UBI as quickly as possible and merge with it, targeting a combined profit of more than 6 billion euros in 2022.

Reporting by Valentina Za, Stephen Jewkes and Andrea Mandala; Editing by Muralikumar Anantharaman

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