Credit Agricole surprises with timing of bid for Emporiki

PARIS (Reuters) – France’s Credit Agricole launched a friendly offer for Greek bank Emporiki, valuing the lender at 3.1 billion euros ($3.9 billion), in a bold thrust into Europe’s southern periphery. Credit Agricole, which already owns 8.9 percent of Emporiki, explained its bid for full control, saying demand for financial services in Greece is surging as the economy outpaces other European countries. «Given Greece’s above-eurozone growth rate and attractive banking perspectives, Credit Agricole considers there is full scope for further developing Emporiki’s activities in the Greek market,» France’s biggest retail bank said in a statement. The Greek government is privatizing Emporiki, the country’s fourth-ranked bank by assets, as part of a drive to slash public debt. The acquisition by Credit Agricole is the latest in a string of foreign bank acquisitions in southern Europe, following takeovers in Italy and Turkey. Credit Agricole, France’s largest retail bank, said it would offer 23.50 euros per share, valuing Emporiki at 3.1 billion euros. The Greek bank made a profit last year of 71 million euros. The Greek government owns 40 percent of Emporiki. This includes a direct stake of 9.5 percent and 30 percent which it controls through a state pension fund. Economy and Finance Minister Giorgos Alogoskoufis welcomed the bid and said the government would give it serious consideration along with any potential counterbids. The bid has to be accepted by at least 40 percent of Emporiki’s shareholders to succeed, Credit Agricole’s Chief Financial Officer Gilles de Margerie said in Athens. Analysts welcome deal Agilis Gestion fund manager Ion-Marc Valahu said the Emporiki acquisition was a positive move for shareholders. «It looks a lot cheaper than going for Alliance & Leicester. They’re only paying around 3 times the book value, which is within the range, nothing too dramatic,» said Valahu, whose portfolio includes Credit Agricole shares. Unlike some analysts, Valahu did not think that Credit Agricole would bid in the near future for UK bank Alliance & Leicester, which the French bank is also examining as a possible takeover target. «That would be a lot to digest at once,» he said. Credit Agricole shares were down 2.1 percent at 1346 GMT, underperforming the French blue chip market, while Emporiki shares closed 5.80 percent higher at 24.80 euros. Alliance & Leicester’s shares were down 5.3 percent as the bid hopes waned. If successful, Agricole will be the second French bank to acquire a majority stake in a Greek bank after Societe Generale bought Geniki Bank in 2004, which it is turning around. The French bank said the offer was the largest foreign investment made in Greece and would be accretive to its earnings per share within two years. Credit Agricole has targeted overseas takeovers to offset sluggish growth at home where it faces stiff competition from rivals BNP Paribas and Societe Generale. Credit Agricole said it would fund the takeover from its cash resources. It expected its Tier One ratio to be back at 7.5 percent by the end of September without a rights issue. Bid expected Analysts have long expected that Credit Agricole would seek full control of Emporiki, just as they expect it might eventually take over Italian bank Intesa, where it has an 18 percent stake. Analysts in Athens said Credit Agricole’s offer for Emporiki had come sooner-than-expected. «The price offered… implies a 2005 price-to-earnings multiple of 18 and a price-to-book of 2.7,» said Proton Securities. Rising profits Riding a mortgage and retail lending boom, Greek banks trade at 15.2 times 2006 earnings, according to Reuters Estimates. Profits have been growing in the last 3 years and despite rising competition, growth prospects remain good. Credit Agricole first bought a stake in Emporiki in 2000, and since then it has invested 367 million euros in the bank.

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