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Alpha Bank Rejects $3.8 Billion Bid From National Bank of Greece

National Bank of Greece Seeks to Raise EU2.8 Billion
A pedestrian passes the National Bank of Greece SA headquarters in Athens. Photographer: Kostas Tsironis/Bloomberg

Alpha Bank SA, Greece’s third-biggest bank, rejected an unsolicited 2.8 billion-euro ($3.8 billion) takeover bid from National Bank of Greece SA, the nation’s largest lender, saying the offer was inadequate.

Alpha’s board voted unanimously to spurn National Bank’s all-stock offer, Athens-based Alpha said in a stock exchange filing today. National Bank urged Alpha to give the offer, made on Jan. 18, “serious consideration,” saying it would create a stronger bank that would be less reliant on emergency funding.

The government is pushing the country’s banks to combine after their capital was depleted by the sovereign debt crisis and mounting loan losses. Previous attempts to create fewer, stronger banks in Greece have stumbled: talks between National and Alpha collapsed in January 2002 after the two sides failed to agree on how to share power in the combined company. Piraeus Bank SA, the fourth-biggest bank, last year abandoned its bid to buy two smaller government-controlled banks after failing to get a response from the government.

The rejection “may be a ploy by Alpha to receive an improved offer” and National is likely to sweeten its bid, Athens-based broker Euroxx Securities said in a note to clients. A “tie-up between Alpha and National would constitute a key catalyst for a radical transformation of the Greek banking market, with a positive repercussion across other Greek banks.”

Proposed Terms

Anthimos Thomopoulos, National Bank’s group chief financial officer, didn’t answer his mobile phone when called to comment on Alpha’s rejection.

National Bank offered eight new shares for 11 existing Alpha shares, according to an e-mailed statement from the Athens-based lender today. National Bank shareholders would own 71 percent of the combined lender, and would have the right to name the vice-chairman, chief executive officer and three directors. Alpha would name the chairman and four directors.

“The proposed merger would create the leading bank in Greece, which we believe would be pivotal in supporting the recovery of the Greek economy,” National Chairman Vassilis Rapanos said in an earlier statement today. “I am deeply convinced about the merits of this transaction and I believe it would resonate favorably with shareholders of both banks.”

The offer values Alpha Bank shares at about 5.50 euros each, 18.9 percent more than Alpha Bank’s average price over the past 20 days. That’s a narrower premium than on the previous four European banking takeovers in Europe valued at more than $1 billion in the past 12 months, data compiled by Bloomberg show. The bid values Alpha Bank at 0.49 times book, the lowest multiple among those transactions, the data show.

Shares Suspended

Shares in both banks were suspended by the Athens Stock Exchange before National’s announcement. National Bank has gained 25 percent so far this year to 7.57 euros, while Alpha added 26 percent to 4.79 euros before today’s suspension.

Greek Finance Minister George Papaconstantinou welcomed news of the talks today, and said the government would look positively on all initiatives that would bolster the country’s banking system, according to a statement from his office.

The country’s central bank chief George Provopoulos has also urged the country’s lenders to team up to make stronger companies that can ride out the Greek crisis, and extend loans to businesses and households to get credit flowing through to the economy again.

Capital Boost

Greece’s banks were weakened as the country’s debt crisis led to a slump in bond prices, a shrinking economy and forced the industry to turn to emergency funding from the ECB. As the country enters a third year of recession, Greece’s lenders face increasing loan losses as the government cuts wages and pensions to ensure the flow of 110 billion euros in bailout funds pledged by the European Union and International Monetary Fund last year.

The combined bank’s core Tier 1 capital ratio, a gauge of financial strength, would be 10.7 percent, giving it better access to funding markets and allowing it to cut its reliance on emergency European Central Bank money, National Bank said.

The transaction would have been the biggest takeover in Greece since Deutsche Telekom AG bought a stake in Hellenic Telecommunications Organization SA in 2008, according to data compiled by Bloomberg. The takeover would also be the largest banking acquisition in Europe since Banco Santander SA of Spain agreed to buy Poland’s Bank Zachodni WBK SA in September.

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