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Agricole agrees $20bn Lyonnais bid
PARIS, France (CNN) -- Credit Agricole has agreed to buy rival Credit Lyonnais for 19.5 billion euros ($19.9 billion) in cash and stock. The deal creates a new French banking giant that challenges rival BNP Paribas for the top spot in the euro zone. French market regulator Conseil des Marches Financiers said in a statement on Monday that Agricole will offer five of its shares plus 148.4 euros for every four Lyonnais shares investors hold -- the equivalent of 56 euros per share, a six percent premium to Friday's closing Lyonnais share price. Agricole's bid is a serious challenge to France's biggest bank BNP (PBNP), which sparked a tussle for control of Lyonnais (PCL). BNP bought a 10 .9 percent stake in Lyonnais in a hastily organised government auction three weeks ago.
Agricole replaced its chairman, Marc Bue, earlier this month after rival BNP Paribas snatched a stake in Lyonnais from under its nose. Agricole refused to pay 44 euros per share for the government's stake in Lyonnais, prompting Finance Minister Francis Mer to sell it to the highest bidder. The bank appointed combative chairman Rene Carron to pursue Lyonnais, pushing up its own stake in the bank to 17.4 percent. Agricole, which will pay out a maximum of 66.18 percent of the bid in cash, has secured the backing of Lyonnais shareholders AGF (PAGF), Commerzbank (FCBK), BBVA and IntesaBci for its offer. Together those shareholders hold about 21.2 percent of Lyonnais shares. "I think the deal is a good one for Agricole,'' Jonathan Spread, banks analyst at Morley Fund Management in London, told Reuters. "Lyonnais was a prime, scarce asset, the price does not look horrendous and the strategic fit is good.'' Carron had held extensive meetings over the weekend with the bank's powerful regional branches or "caisses regionales'' to secure backing for the bid, Reuters said. Credit Lyonnais CEO Dominique Ferrero is set to become the operational second-in-command in the combined group under Agricole chief Jean Laurent. BNP said last week it would not stand in the way of a friendly deal between the two banks provided an Agricole (PACA) offer was "acceptable'' to all parties. But BNP could still come back with a higher bid if it deemed the Agricole offer too low or saw opposition from Lyonnais shareholders or staff to the deal, Reuters said. Credit Lyonnais, which has a market capitalisation of about 18.4 billion euros and is seen as too small to continue on its own in the long term, held talks with Credit Agricole about a merger earlier this year before disagreements over the balance of power in a combined group scuppered a deal. Agricole's 56 euros a share deal creates a bank with a market value of 34.2 billion euros, making it slightly bigger than BNP as the euro zone's biggest bank. Credit Lyonnais has turned itself around since bad loans brought the bank close to bankruptcy and forced a costly government bailout in the mid-1990s. Agricole, already the largest retail player in France with about 20 percent of the deposit market, is keen to get its hands on the strong urban retail business of Lyonnais to complement its own predominantly rural network, Reuters said. Reuters contributed to this report.
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