UniCredit Agrees To Acquire Ukraine's Ukrsotsbank

MILANO, Italy -- UniCredit SpA, Italy's biggest bank, agreed to acquire AKB Ukrsotsbank in its third takeover in three months. The deal values the Ukrainian company at $2.07 billion.

Federico Russo, President of the Board, UniCredit Bank in Ukraine

UniCredit will pay cash for 95 percent of Ukrsotsbank, the Milan-based bank said today. The acquisition comes after smaller Italian rival Intesa Sanpaolo SpA in April dropped a bid for the Kiev-based lender.

Chief Executive Officer Alessandro Profumo's 2005 purchase of Munich-based HVB Group, Europe's biggest cross-border takeover, gave UniCredit 3,000 branches and 24 million customers in central and eastern Europe.

The Ukrsotsbank acquisition, however, comes at a high price and may not be well-received by investors, said Ralf Breuer, an analyst with WestLB in Duesseldorf.

``It's far beyond the point where we can apply a price to book value'' to the acquisition, said Breuer, who has a ``hold'' rating on UniCredit shares. ``The sentiment toward Profumo has pretty much turned around. The crowd trusted him blindly for a long time.''

UniCredit is the fastest-growing of Italy's top three banks after completing deals worth $25 billion in two years and tripling assets over the past three years. Profumo set aside plans to acquire Paris-based Societe Generale SA in May to buy domestic rival Capitalia SpA for $29.5 billion. On June 21, he agreed to spend $2.2 billion to take over AO ATF Bank to enter Kazakhstan.

Shares Fell

UniCredit shares fell 1.1 percent today to 6.64 euros ($9.03) in Milan, giving the company a market value of 69.3 billion euros. The stock, which is up 62 percent since the HVB acquisition was announced in June of 2005, is flat this year.

UniCredit's valuation of Ukrsotsbank, Ukraine's fourth- biggest lender, is 48 percent higher than the $1.4 billion Intesa valued the company at in September. Ukrsotsbank, which has 497 branches and 2.6 billion euros in assets, more than doubled its profit to $57.3 million last year.

The acquisition will help UniCredit tap Ukraine's retail market, where loans are poised to expand by 60 percent this year, according to company forecasts.

Ukrsotsbank reported a 63 percent increase in assets last year, and Chief Executive Officer Borys Timonkin said in January he expected the bank to quintuple its assets to $20 billion in 2012.

UniCredit already has two units in the country that have six branches and 524 million euros in assets and work primarily with corporate clients. The Italian bank will continue to consider ``add-on'' acquisitions in central and eastern Europe, Profumo said today.


UniCredit plans to conclude the acquisition in the fourth quarter. It's buying the Ukrsotsbank stake from Interpipe Group, a steel-pipe maker run by Viktor Pinchuk, the son-in-law of former Ukrainian president, Leonid Kuchma.

In addition to the purchase price, UniCredit will pay a further $130 million to existing Ukrsotsbank shareholders for its share in a capital increase that is expected to be completed before the deal is completed.

Credit Suisse Group was the lead financial adviser for UniCredit, while Merrill Lynch & Co. advised Interpipe.

Source: Bloomberg