National Bank of Greece SA, the nation’s largest lender, said its 3 billion-euro ($4.1 billion) bid for Alpha Bank SA, the third-biggest, will be received positively by investors after Alpha spurned the offer.
“The strategic and financial merits of the combination are compelling to both banks and their respective shareholders,” Chief Executive Officer Apostolos Tamvakakis said on a conference call today. “We are confident that the market will receive this proposal positively and express its position accordingly.” He wouldn’t take questions from reporters.
Alpha’s board voted unanimously Feb. 18 to spurn National Bank’s offer of about 5.53 euros a share, based on today’s closing price. The bid prices Alpha at about half its book value, a lower multiple than in the previous four European bank takeovers of more than $1 billion in the past year, data compiled by Bloomberg show.
Alpha jumped as much as 19 percent in Athens trading today after the Greek bourse regulator lifted a trading suspension imposed on both stocks on Feb. 18. Alpha shares gained 5 percent to 5.03 euros at the 5:20 p.m. close, while National Bank climbed 0.4 percent to 7.60 euros.
“There’s a lot of value in merging banks in Greece because of the attainment of scale, overlap in the domestic market and strategic complementarity” in southern and eastern Europe, Alexander Kyrtsis, an analyst at UBS AG in London, said by telephone today. Kyrtsis rates Alpha a “buy” with a price target of 6.20 euros. Still, he said, “despite the sovereign situation, it’s hard to explain to shareholders to sell below book value.”
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 Bank 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 state-controlled lenders after failing to get a response from the government.
Tamvakakis told investors the bank was “surprised” at Alpha’s rejection of the offer following two weeks of talks.
“Our proposal was always meant to be and remains friendly,” he said.
National Bank Deputy Chief Executive Officer Anthimos Thomopoulos said the target for as much as 700 million euros of cost savings was “conservative” and achievable and that regulatory clearance wouldn’t be a hurdle to the takeover.
Bank of America Corp. and Morgan Stanley are advising National Bank, while Citigroup Inc. and JPMorgan Chase & Co. are advising Alpha Bank.