Italian bank Credito Valtellinese (Creval) is seeking a higher acquisition bid from French banking group Credit Agricole.

Last week, Credit Agricole launched a voluntary public tender offer to buy Italian bank Creval for €737m ($880m).

Its Italian banking arm Credit Agricole Italia had offered to pay €10.50 for each share of Credito Valtellinese.

This represented a 21.4% premium on Credito’s closing price on Friday, 27 November 2020.

However, Credito believes that this offer is too low, Reuters reported citing sources familiar with the matter.

The bank is preparing to negotiate for a better price from Credit Agricole.

One of the sources said that “there will be firm resistance from Credito Valtellinese until a better price is agreed.”

The source added that Credit Agricole’s offer price is too low in light of the tax benefits Italy is offering to spur mergers in the banking industry, the report added.

These tax benefits are anticipated to be approved by this year-end, as part of Italy’s 2021 budget.

At its board meeting, Credito Valtellinese described the bid as “unexpected and not previously agreed.”

On the contrary, Credit Agricole Italia boss Giampiero Maioli said that it sees the bid as friendly.

Advisers

Moreover, Credito Valtellinese CEO Luigi Lovaglio obtained the approval from the bank’s board to hire advisers to consult on its defence.

Bank of America (BofA), Mediobanca and law firm RCCD are expected to be hired to advise on the negotiation, according to Reuters.

A representative for Credito Valtellinese said that its board meeting was held exclusively to mandate Lovaglio to name advisers in accordance with the chairman who can support the board in its activities.

The bank is expected to formalise the mandates at board meeting on 3 December 2020.

A successful deal

The combination of Credit Agricole Italia and Credito Valtellinese, if successful, will make the group the sixth-largest retail bank in Italy, with €100bn in assets.

The two group will continue their existing bancassurance partnership under their group Crédit Agricole Vita.