Italy's UniCredit was set to acquire smaller rival Capitalia for more than $29 billion on Sunday as the boards of both banks met to approve a deal to create Europe's second biggest bank by market value.
As the boards began deliberations on the all-stock offer Capitalia's key group of investors that controls about 31 percent of the Roman lender voted unanimously to back the bid. The take-over enables the new UniCredit, with a combined market capitalisation of more than $135 billion, to expand on its home turf to challenge bigger domestic rival Intesa Sanpaolo and gives it a retail banking network stretching from the southern island of Sicily to eastern Europe.
The deal also keeps Capitalia, Italy's third-largest bank, out of the hands of several prospective foreign buyers. Capitalia's chief executive, Matteo Arpe, who spearheaded a turnaround at the bank but locked horns over strategy earlier this year with its influential chairman, Cesare Geronzi, has resigned, Capitalia confirmed in a statement.