Premafin Finanziaria SpA, the controlling investor in Italy’s second-biggest insurer, Fondiaria-SAI SpA, surged after it received a takeover offer.
Unipol Gruppo Finanziario SpA, Italy’s No. 3 insurer, said today it plans a merger with three rivals including Premafin, to help guarantee their solvency. Shares of the targets rose. Premafin gained as much as 21 percent to 35.1 cents, valuing the company at 142 million euros ($182 million).
Unipol plans to purchase 51.3 percent of Premafin at 36.56 euro cents per share, Unipol said in a stock-exchange statement today. The offer for the stake, held by the Ligresti family, will be followed by a tender offer for the rest of Premafin. Premafin controls Fondiaria, Italy’s No. 2 insurer, which in turn controls Milano Assicurazioni SpA. Under the plan, Unipol would help recapitalize Premafin and Fondiaria, which already is proposing a share sale. Shares of Fondiaria rose as much as 16 percent and Milano Assicurazioni gained 10 percent.
Shares of Unipol rose as much as 7.5 percent in Milan before declining 2 percent at 20.5 cents as of 11:45 a.m., valuing the business at 612 million euros.
“The integration would take place with a view to safeguard the current and future solvency of Premafin and Fondiaria,” Unipol said in the statement.
Lenders to the insurers probably will gain the most from the agreement, while the smaller investors may see their stakes diluted, Intermonte SIM analysts wrote in a note to clients today. Unipol may need to inject further capital in Fondiaria and sell some non-life premium business to curtail a dominant position that would result through the merger, Credit Agricole Cheuvreux analysts wrote in a separate note.
Fondiaria expects a net loss in 2011 of about 925 million euros and its solvency ratio is about 90 percent, below the regulator’s minimum requirement. Chief Executive Officer Emanuele Erbetta also is selling assets and real estate to boost capital.