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BNP raises offers to $41B
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July 1, 1999: 7:11 a.m. ET
French bank increases takeover terms for SocGen, Paribas
By Staff Writer Rod Cant
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LONDON (CNNfn) - Banque Nationale de Paris Thursday raised its combination offers for rivals Société Générale and Paribas by around 10 percent to $41 billion, seeking to scuttle the two banks' own merger plans.
The bid exceeds the $37 billion in offers for Société Générale (PGLE) and Paribas (PPM) that BNP announced in March as well as $17.3 billion value of the two banks' merger plans.
"This is not a knockout blow, although it could turn into one," according to Adrian Pilz, European banking analyst at specialist financial brokerage Fox-Pitt, Kelton.
He termed the rise in the value of the deal "unspectacular," although he said more details were needed to fully appreciate the offer.
Whether the latest move will be enough to gain victory for BNP is not clear. "The outcome is very difficult to forecast," said a Paris-based analyst who did not wish to be named.
BNP's cash sweetener
BNP said its latest offer for SocGen is a 5 percent improvement on its original deal. It has added a 60 euros per share sweetener to the terms of the first offer.
The revised deal is a 6.6 percent premium to SocGen's closing stock price Wednesday, and a 25 percent premium to the share price on March 9, when the original offer was made.
BNP said the latest Paribas offer is a premium of more than 12 percent to its earlier offer, and a 15 percent premium to the closing price of Paribas stock Wednesday.
All three companies were suspended temporarily by Conseil des Marchés Financiers, the French financial watchdog, on the Paris bourse Thursday.
Complicated offers
BNP's new offer for SocGen is two-part: SocGen shareholders are being offered the choice of receiving 15 BNP shares and 60 euros in cash for every seven SocGen shares they own.
A "subsidiary" offer, acceptable for up to 30 percent of SocGen's capital, involves swapping 11 BNP shares for 5 SocGen shares. Investors can choose how much of their SocGen shareholding they allocate to each offer.
The revised offer for Paribas is more complicated. It comprises 29 BNP shares and 13 guaranteed value certificates (GVG) for every 20 Paribas shares. The GVG element is aimed at securing the value of the offer in the event that BNP shares decline.
"They [the CVGs] are a bit of a safety net," according to Pilz, who said the securities, which give the same guarantee as a cash offer but defer the outlay of any cash, may be more suitable to Paribas' core shareholders.
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