Banque Nationale de Paris Makes Surprise Bid for Societe Generale and Paribas in $37 Billion Offer

Banque Nationale de Paris S.A. has made a surprise bid to acquire two of its largest French rivals, Societe Generale S.A. and Paribas S.A., in a move that would create the largest bank in the world with over $1 trillion in assets. The offer, valued at $37 billion, would eclipse UBS of Switzerland, the current world's largest bank, and would involve trading in the stock of all three banks being indefinitely suspended. The bid comes just over a month after Societe Generale announced its plan to acquire Paribas in a $18 billion stock deal.

Key Takeaways:

• Banque Nationale de Paris S.A. has offered $37 billion in stock to acquire Societe Generale S.A. and Paribas S.A., creating a banking group with over $1 trillion in assets.
• The offer would give Banque Nationale a majority stake in both Societe Generale and Paribas, requiring shareholder approval and trading in the stock of all three banks to be indefinitely suspended.
• The bid would offer a premium of 14% over Societe Generale's closing share price of $157.14 and a 24% premium over the Paribas share price of $85.95.
• Banque Nationale de Paris shareholder approval is required for the takeover effort.
• Banque Nationale de Paris has reported a 23% rise in net income in 1998, to 1.1 billion euros.
• Societe Generale reported a 15% rise in 1998 earnings, to 1.07 billion euros, while Paribas reported earnings largely unchanged from 1997 at one billion euros.
• The announcement comes in the context of a potential new wave of mergers and takeovers in Europe, with recent examples including Olivetti's $60 billion hostile bid for Telecom Italia and Banco Santander's acquisition of Banco Central Hispano for $11.3 billion.

Statistics:

• $37 billion: The value of Banque Nationale's offer to acquire Societe Generale and Paribas.
• 14%: The premium offered by Banque Nationale over Societe Generale's closing share price of $157.14.
• 24%: The premium offered by Banque Nationale over the Paribas share price of $85.95.
• $157.14: Societe Generale's closing share price on the day of the announcement.
• $85.95: The closing share price of Paribas on the day of the announcement.
• 2,700: The number of retail branches that Societe Generale would have brought to Paribas through the proposed merger.
• 1998: The year in which Banque Nationale de Paris reported a 23% rise in net income, to 1.1 billion euros.
• 1.1 billion euros: Banque Nationale de Paris' net income in 1998.
• 1.07 billion euros: Societe Generale's earnings in 1998.
• 1 billion euros: Paribas' earnings in 1997.

Sources:

• Banque Nationale de Paris S.A.
• Societe Generale S.A.
• Paribas S.A.
• Conseil des Marches Financiers (French stock market regulator)
• The Socialist Cabinet of Prime Minister Lionel Jospin
• Credit Agricole
• UBS of Switzerland
• Olivetti S.p.A.
• Telecom Italia
• Banco Santander
• Banco Central Hispano
• Credit Lyonnais
• Credit Agricole