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Fondiaria-Sai lays out merger ratio proposal

by Laura Board  |  Published May 18, 2012 at 12:15 PM
insurance_227x128.jpegItalian insurer Fondiaria-Sai SpA on Friday, May 18, laid out the ownership ratio it advocates in a complex, four-way merger, sidelining a competing investment proposal from two funds that have amassed an 8% stake.

The four-way merger aims to create a more powerful rival to market leader Assicurazioni Generali SpA and solve Fondiaria-Sai's pressing funding needs after a disastrous 2011 pushed it €1.2 billion ($1.5 billion) into the red.

After a two-day board meeting, Fondiaria-Sai said it would propose that shareholders in Unipol Gruppo Finanziario SpA, which ranks No. 3 behind Fondiaria in terms of sales, get 61% of the enlarged company. Under the plan, a 27.5% stake would go to Fondiaria-Sai investors, with 10.7% to Fondiaria-Sai affiliate Milano Assicurazioni SpA and 0.85% to Fondiaria-Sai's 36% shareholder, Premafin Finanziaria SpA Holding di Partecipazioni.

The terms have yet to be agreed upon, and with Unipol gunning for a 67% stake and Premafin calling for between 0.98% and 1.66%, closing of the January deal-in-principle isn't guaranteed.

In spelling out its desired terms, Fondiaria-Sai's management sidelined an investment proposal worth about €400 million from shareholders Sator SpA, a vehicle of financier Matteo Arpe, and affiliate Palladio Finanziaria SpA.

The funds built their shareholding in February and in March voted against a Fondiaria-Sai share sale necessary for its fusion with Unipol to proceed. The investment would have given the two funds up to 45% of Fondiaria-Sai's equity. Representatives of the funds couldn't immediately be reached for comment on their next move.

Fondiaria-Sai shares were down 7.2% at €0.98 by midafternoon in Milan, equating to a market value of €419.7 million. Unipol shares were little changed at €19. The company's equity is worth €525.8 million.

The next deadline for the merger partners is May 22, when Premafin has a shareholders' meeting to vote on a capital increase of up to €400 million reserved for Unipol.

Unipol, of Bologna, had in January announced the outline of its plan to invest about €400 million for a controlling stake in Fondiaria-Sai.

It was forced to revisit the structure of the deal after Italian regulators ruled that a plan to buy a controlling stake in Premafin directly from the Ligresti family would disadvantage minority shareholders in Fondiaria-Sai.


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Tags: Assicurazioni Generali SpA | Fondiaria-Sai SpA | insurer | M&A

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