Magazine article American Banker

French Government Seen Triumphing as BNP Sweetens SocGen-Paribas Bid

Magazine article American Banker

French Government Seen Triumphing as BNP Sweetens SocGen-Paribas Bid

Article excerpt

As the takeover battle among France's biggest banks moves toward a climax, it appears that the government will get what it wanted-a three-way merger that will create the world's largest bank.

This week, France's central bank gave up its efforts to mediate among Banque Nationale de Paris and the two banks it is trying to buy: Societe Generale and Groupe Paribas. Both target banks are fighting BNP's hostile bid and are seeking to merge with each other.

The government, known for its intervention in business matters, said it would pull out of the talks and let the market resolve the matter. But some analysts saw the central bank's sudden hands-off policy as merely a strategic retreat.

On Thursday, BNP sweetened its offer for its two rivals by $2 billion, to $39 billion. If the offer is accepted by a majority of each bank's shareholders, the months-long battle would be over.

"The odds are now in BNP's favor," said Matthew Czepliewicz, a banking analyst at Salomon Smith Barney in London. "This is a fairly persuasive bid," and odds are that BNP will get more than 60% of the shares, he said.

But it remains uncertain whether even BNP's latest bids will draw enough shares to give it clear-cut control of SocGen and Paribas.

About 27% of SocGen's voting shares are in the hands of its employees and large French corporations. Both groups have vehemently opposed merger with BNP. And Paribas also has large investors, such as Allianz-AGF, the French-German insurance group that holds 8. …

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