In particular, with regard to the offer for the Bank Austria shares, the price could be changed, due to the application by the Austrian Takeover Commission (ATC) of a calculation model different from the one adopted by UniCredit. The Austrian Takeover Commission is due to approve the terms of the offer, as already described in the Information Document (page 22).
According to applicable Austrian provisions, the price of the cash offers has to meet the following requirements: (1) it shall not be lower than the average Stock Exchange price during the 6 months prior to the announcement, (2) it shall not be lower than the highest price paid for Bank Austria shares by the offeror (or by any parties related to the offeror) during the 12 months preceding the offer and (3) it shall be deemed fair on the basis of an assessment performed by the ATC .
According to UniCredit the price of €70.04 per share, equal to the 6 month average price prior to 27th May 2005 (last working day preceding the joint statement by UniCredit and HVB dated 30th May), complies with the first requirement outlined above, while the second requirement would not be applicable. On the contrary, the ATC has already stated its position according to which the second requirement is relevant as the cash price for Bank Austria shares should be determined on the basis of the implied consideration of the exchange offer for HVB shares, considered as a “reference transaction”. In this regard, the implied consideration of the exchange offer for the HVB shares should be calculated on the basis of the UniCredit market price multiplied by the envisaged exchange ratio (1 HVB share: 5 UniCredit shares): a portion of such implied consideration should be “allocated” to Bank Austria (77.5% owned by HVB) on the basis of the relative weight of HVB and Bank Austria’s respective market capitalisations. However, the ATC has indicated that it is willing to consider potential exceptions to the rule outlined, if adequately supported. In addition, UniCredit confirms that it has no evidence that the ATC has formulated an offer price scenario of €73 per share, as recently reported in the press.
On the basis of the uncertainty on the cash price , the Board of Directors of UniCredit has delegated the Chief Executive Offer the power to change the offer price, provided that a difference is maintained between the cash offer and the implied value of the exchange offer, such that the latter remains more attractive.
The ATC will issue its final opinion on the offer only after the formal submission of the offer document , due by 5th August 2005.
In relation to the offer for the BPH shares, there still exist some areas of uncertainty, with regard, in particular, to the transaction timetable, linked to the authorisations required from the Polish regulatory bodies, with potential impacts on the determination of the offer consideration. In fact, the calculation of the price of the alternative cash offer takes into consideration the date of the official announcement of the offer , which should be authorised in advance by the relevant local Authorities. It cannot be excluded that the authorisation process may be rather lengthy, also as a result of the assessment of the impact of the transaction on the concentration of the local market; consequently, the price of €123.58 per share (PLN 497.67) sannounced on 12th June 2005 cannot be considered final and may have to be recalculated when the offer is officially launched.
A significant delay in the launch of the BPH offer, in addition to the potential effect on the cash offer price, would generate a misalignment compared to the HVB and Bank Austria offers’ timetables. In this case, since the HVB and Bank Austria offers would be consummated prior to the BPH offer, the latter would become mandatory and, therefore, a shares exchange alternative would not be available.
The Board of Directors of UniCredit has delegated the Chief Executive Officer to adjust also the cash consideration of the BPH offer to the level required by the regulations applicable at the date the offer is launched.
With regard to the economic impact that could result from a change of the cash consideration of the Bank Austria and the BPH offers, currently it is only possible to formulate scenarios based on assumptions, the realisation of which cannot be assessed. Provided that, based on the terms of the transaction approved and already announced, , it was estimated that the transaction would have an impact on the UniCredit’s Cash EPS neutral in 2006 and positive in the following years, it is now estimated that, if the minority shareholders of Bank Austria and Bank BPH fully accept the voluntary cash offers by UniCredit, the impact on UniCredit’s Cash EPS would be positive already starting from 2006. In this scenario, assuming a year-on-year growth of the dividend per share, the pro-forma Core tier 1 ratio would increase from 4.6% in 2005 to 5.7% in 2007. In addition, assuming a 10% increase in the price of the cash offers for Bank Austria and Bank BPH, the impact on UniCredit’s Cash EPS would remain positive starting from 2006, while the pro-forma Core tier 1 ratio would increase from 4.5% in 2005 to 5.6% in 2007.
29th July 2005
