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SocGen boosts Paribas bid
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June 15, 1999: 6:00 a.m. ET
BNP may be forced to add cash to its rival offer as French bank battle continues
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LONDON (CNNfn) - Shares in French banks Société Générale and Paribas were suspended Tuesday, a day after SocGen boosted its friendly offer for the investment bank to head off hostile bids for both banks by Banque National de Paris.
The improved offer surprised analysts who believed the momentum in the four-month battle was shifting toward BNP, though the competing offers face a crucial month of scrutiny by French regulators.
SocGen has added a 1.5 billion euro ($1.57 billion) cash component to its Paribas bid -- first launched in February -- and has introduced a share buyback program. The move gained impetus when insurance giant Axa, a shareholder in all three banks and formerly a BNP supporter, voted in favor of the new offer.
"SocGen has decided to shoot first and it will put the pressure on BNP," said Didier Valet, banking analyst at Dresdner Kleinwort Benson in Paris. He believed the bid was starting to make Paribas look expensive and would force BNP to added cash to its own all-stock offer.
Paribas has twice rejected BNP's hostile advances when the bank launched its surprise counter bid in March. The protracted takeover battle has caused embarrassment in French political and banking circles. The banks have been urged to reach a resolution to allow them to compete effectively in Europe's consolidating banking sector.
However, the saga has been accompanied by squabbles over the value of the rival bids and counter-claims over synergies and cost savings.
The new SocGen offer boosts the existing five-for-eight share swap with a 75 euro cash element for each bundle of eight Paribas shares. SocGen also introduced a secondary offer of two SocGen shares for three Paribas shares.
SocGen also said it would launch a 2.5 billion euro share buyback program within 18 months of a merger agreement.
BNP's board is due to meet Wednesday while its stock faced a punishing day Tuesday, down 3 percent in pre-market trading.
Valet said a Paris appeals court is expected to reject a challenge to BNP's bid by the target banks Wednesday. However, the more important rulings will be the offer timetables set this month by market regulator CMF, and the COB, France's bourse watchdog.
-- from staff and wire reports
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