Battle for France's Largest Listed Bank Enters Final Round

Strategic Insights -

The battle to create France's largest listed bank is approaching its climax, with Societe Generale, Paribas, and Banque Nationale de Paris claiming majority shareholder support for their respective projects. Michel Pebereau, Chairman of BNP, stated that "The debate is finished. SBP has overcome SG-Paribas," but Daniel Bouton, SG Chairman, countered that it is "extremely unlikely" BNP will achieve majority control of SG. A group of long-term shareholders, representing approximately one-third of SG's voting rights, have pledged not to submit their shares to BNP's offer. The rival projects involve complex structures, making it difficult to compare them on financial grounds. Analysts believe a large number of investors will back the most likely winner rather than make a decision based on the merits of the proposed deals.

Key Takeaways:

  • Societe Generale, Paribas, and Banque Nationale de Paris are vying for control of each other's companies, with BNP claiming a majority of shareholders back its project.
  • Daniel Bouton, SG Chairman, disputes BNP's claim, stating it is "extremely unlikely" BNP will achieve majority control of SG.
  • A group of long-term shareholders representing one-third of SG's voting rights have pledged not to submit their shares to BNP's offer.
  • The rival projects involve complex structures, including cash, shares, and derivatives guaranteeing future share price performance, making comparison on financial grounds difficult.
  • Regulators will automatically approve bids attracting more than 50 percent of voting rights, while bidders failing to break the 50 percent barrier will need to seek new authorization from the central bank.
  • BNP's proposed twin takeovers of SG and Paribas may be contingent on the size of its stake in Paribas, with authorities potentially reviewing the proposal based on this factor.
  • Long-term investors may be less influenced by the proposition of the deals, with analysts suggesting that the outcome will depend on the claims of the bidders.
  • The outcome of the battle for the largest listed bank in France is yet to be determined.

Statistics:

  • BNP claims to have acquired the support of a majority of shareholders.
  • Approximately one-third of SG's voting rights is held by long-term shareholders who have pledged not to submit their shares to BNP's offer.
  • Regulatory requirements state that bids must attract more than 50 percent of voting rights to be automatically approved.
  • BNP's proposal for a majority stake in SG is contingent on the outcome of its competing bid for Paribas.

Sources:

  • "French bank battle nears end with rival bidders claiming victory," Financial Times Limited, 1999.