Portugal’s BCP falls short in bid for BPI

A hostile €5.32bn ($7.2bn) takeover bid by Millennium BCP, Portugal’s biggest listed bank, for smaller rival Banco BPI has failed after fewer than 4 per cent of the target’s shareholders took up the offer.

The collapse marks the second consecutive setback for BCP’s expansion plans after losing a bidding contest to purchase Banca Comerciala Romana, Romania’s largest bank, in 2005. In spite of repeated overtures and an increase in its original offer from €5.7 to €7 a share, BCP failed to persuade any of BPI’s core shareholders, led by La Caixa, Spain’s largest savings bank, to sell.

Stock market officials said shareholders representing only 3.93 per cent of BPI’s capital had taken up the offer, which was conditional on BCP acquiring at least 82.5 per cent.

Paulo Teixeira Pinto, BCP’s chief executive, said the bid had an “undeniable strategic and financial rationale” that would have produced value for the shareholders of both entities by creating a large Portuguese bank with “increased relevance” in Europe.

He added in a statement that the market value of BPI, Portugal’s fifth largest bank, after the failure of the offer was €4.74bn, €585m less than BCP’s final bid valued the bank.

Acquiring BPI would have lifted BCP’s market capitalisation from about €10bn to close to €15bn in what analysts saw as a move partly aimed at protecting BCP from takeover. BCP shares closed slightly down at €3.04. BPI shares gained 1.42 per cent to close at €6.33.

The collapse of the offer marked a triumph for Fernando Ulrich, BPI’s chief executive, and Artur Santos Silva, president, who has resisted the bid since it was launched almost 14 months ago. “Over the past 12 months, BPI has grown bigger, better and stronger,” Mr Ulrich recently told the FT. “We believe wholeheartedly in our project for which we enjoy the firm support of our shareholders.”

Standard & Poor’s Monday upgraded BPI’s credit ratings, saying it was becoming “one of the most flexible and innovative” banks in Portugal.

BPI’s three main shareholders – La Caixa with 25 per cent, Brazil’s Itaú group with 17.6 per cent and Allianz of Germany with 9 per cent – consistently backed the bank’s management in resisting the bid. However, the role of non-listed La Caixa, which is effectively controlled by the Catalan regional government, has raised questions in Portugal, where potential Spanish control of local companies is a sensitive political issue.

Eduardo Catroga, a former finance minister, said La Caixa was a bank that could go shopping, but could not be bought.

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