The Telegraph
Since 1st March, 1999
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Agricole set to snap up Credit Lyonnais

Paris, Dec. 16 (Reuters): Credit Agricole is set to launch an agreed bid for Credit Lyonnais worth some 20 billion euros in a deal to create a new French banking giant that would rival BNP Paribas as the top bank in the euro zone.

Sources familiar with the situation said the boards of Credit Lyonnais and Credit Agricole had met on Sunday evening to discuss the bid, which is expected to be pegged at around 56 euros per share and contain both a cash and stock component.

The deal, which could trigger further banking industry consolidation within France and beyond its borders, is expected to be announced shortly, the sources said.

The bid throws down the gauntlet to BNP, which sparked a tussle for control of Lyonnais when it snapped up the French government’s 10.9 per cent stake in the bank in a hastily called auction three weeks ago.

Initially slow to react, Agricole has gone on the offensive in recent weeks, appointing combative chairman Rene Carron to pursue Lyonnais and pushing up its own stake in the bank to 17.4 per cent with aggressive purchases on the open market.

Sources said that Carron had held extensive meetings over the weekend with the bank’s powerful regional branches, or ‘caisses regionales’, to secure backing for the bid.

Credit Lyonnais CEO Dominique Ferrero is set to become the operational second-in-command in the combined group under Agricole CEO Jean Laurent, sources added.

La Tribune newspaper also reported on Monday that Agricole would bid for Lyonnais at 56 euros a share, fractionally above the target bank’s record closing share price of 55.85 euros seen on December 6 and valuing Lyonnais at over 19.5 billion euros.

The price represents a premium of 6 per cent over Friday’s closing Lyonnais share price of 52.75 euros. Officials at all three French banks involved in the takeover battle declined comment.

Counter-offer likely

As signs emerged last week that Lyonnais was warming to a deal with Agricole, BNP said it would not stand in the way of a friendly deal between the two provided an Agricole offer was “acceptable” to all parties.

But BNP could still come back with a higher bid if it deems the Agricole offer too low or sees opposition from Lyonnais shareholders or staff to the deal. “BNP will examine all aspects of any Agricole offer,” said a source familiar with the bank’s position. “BNP is keeping its options open.”

With its sprawling retail network, Credit Agricole is much larger than Lyonnais in terms of assets but smaller by market value since only a portion of the broader Agricole group is listed on the market.

The two banks held on-again, off-again merger discussions until July 2002 when the talks broke down due to disagreements over the balance of power within a combined bank.

Agricole then refused to pay 44 euros per share for the government’s stake in Lyonnais, prompting finance minister Francis Mer to sell it to the highest bidder.

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