Italian insurer Assicurazioni Generali has formalised its 3 per cent stake in potential predator Intesa Sanpaolo by buying €1.1bn worth of shares in the lender.

Generali took an interest in Intesa four weeks ago via a stock lending deal. The move came just after Intesa’s interest in Generali became public and effectively stopped Intesa from buying shares in the insurer without making a full bid.

On Friday, Generali said that it had cancelled the stock-lending deal and bought shares in Intesa instead, a decision that lessens the costs of the transaction. However, it has also hedged the economic risk associated with the shares via a derivatives deal.

Intesa is sounding out investors over the possibility of making a formal bid for Generali but would only consider a friendly deal. The insurer is sceptical about a deal with Intesa and is planning to beef up its cost-cutting programme to convince shareholders to back its independence.

Intesa shares closed down 1 per cent on Friday, and are now down by a tenth in the year to date.

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