MILAN, May 31 (Reuters) - Italy's biggest insurer
Assicurazioni Generali on Monday said it would launch
a 1.17 billion euro ($1.4 billion) buyout offer for smaller
rival Cattolica to further strengthen its domestic
Italy's insurers had been expected to join a consolidation
process in the country's financial industry where Intesa
Sanpaolo took over rival lender UBI last year to build
a banking and insurance giant.
In another surprise move, last week Italy's second-biggest
insurer UnipolSAI, which is working to expand its
distribution network, raised its stake in small bank Popolare di
Generali had first moved on Cattolica last year, coming to
its rescue with a 300 million euro ($366 million) investment
after supervisors told the Verona-based insurer to bolster its
Buying a near 24% stake, Generali became the single largest
investor in Cattolica, relegating Warren Buffett's Berkshire
Hathaway to second place when one excludes a 12.3%
holding held by Cattolica itself.
To gain full control, with the goal of taking Cattolica
private, Generali is offering 6.75 euros a share, equivalent to
a 15.3% premium to Cattolica's closing price on Friday.
Cattolica's shares surged 15% on Friday after it unveiled
better-than-expected earnings. They had jumped more than 5%
earlier in the week on UnipolSai's move, which traders said put
pressure on Generali.
Cattolica declined to comment on the offer which its board
will have to provide an official opinion on. Two people familiar
with the situation said Generali's move was not perceived as
At a meeting early on Monday, Generali said its board had
unanimously voted in favour of the bid, confirming what sources
had told Reuters.
Generali has 2.3 billion euros left to use for acquisitions
under its current business plan to end-2021 and is under
pressure by some of its shareholders to expand. The company
recently lost out to Germany's Allianz for assets in
The takeover is also seen as keeping Cattolica from falling
prey to foreign insurers which may seek to grow in Italy. The
country lags other developed economies on the insurance front
partly due to its generous healthcare system and tightly-knit
The takeover will allow Generali to displace Bologna-based
UnipolSAI as Italy's largest player in the non-life sector.
Generali will also strengthen its presence in the life
business - where it faces growing competition from Intesa and
the national postal service Poste Italiane.
Generali, which like Cattolica is based in Italy's wealthy
north east, said the tie-up would yield benefits of more than 80
million euros a year before taxes, while it estimated
integration costs at 150-200 million euros over the next four
Generali said the offer, which it expects to conclude by the
end of the year, was conditional on it gaining control of at
least 66.67% of Cattolica, a threshold it reserved the right to
lower to 50% plus one share.
Rothschild, Mediobanca and Bank of America
are advising Generali. ($1 = 0.8199 euros)
(Additional reporting by Claudia Cristoferi and Giulia Segreti;
Editing by Mark Potter and Jane Merriman)