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Merita eyes Nordic rival
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September 20, 1999: 11:05 a.m. ET
Swedish-Finnish MeritaNordbanken bids $3B for Norway's Christiania Bank
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LONDON (CNNfn) - Swedish-Finnish bank MeritaNordenbanken sprang a $3 billion takeover bid Monday on Norway's number-two bank, Christiania Bank, prompting a lukewarm response from Norwegian financial and political quarters and concerns from analysts that the bid may be too low.
Christiania's chief executive officer, Tom Ruud, rushed to embrace the offer as "a very good solution" for his bank. Christiania has been talking since earlier this year with MeritaNordbanken, Norwegian rival Den norske Bank, and Sweden's SEB. None of those talks had resulted in a deal until now.
But the enthusiasm wasn't universally shared by analysts, some of whom thought Christiania isn't getting good enough value. And MeritaNordbanken's chairman, Jacob Palmstierna, told reporters in Oslo that he still hoped to fold a Danish bank into a merged group.
"We are now, I hope, on our way to get a Norwegian partner, but a four-leaf clover is better than a three-leaf clover," Palmstierna said.
The 44 kronor-per-share cash bid by MeritaNordbanken represents a 29 percent premium over Christiania's closing share price in Oslo Friday of 34.1 Norwegian kronor.
Merita shares were up 6 percent at 5.46 euros in Helsinki Monday afternoon, after initially jumping nearly 9 percent. Christiania stock leapt 26 percent in Oslo to 43.00 kronor.
The offer comes amid a growing trend by Scandinavian banks over the past year and a half to break out of relatively small and restrictive financial markets as they follow their Western European and American peers onto a global stage.
The creation of a Nordic titan?
Christiania itself has seen its shares steadily rise in recent weeks amid hopes that it might be vulnerable to a bid from either Sweden's Handelsbanken or MeritaNordbanken. Christiania already had spurned the overture from Den norske Bank.
A Merita-Christiania fusion would result in the creation of a Nordic financial titan with assets of 123 billion euros ($127.9 billion). The enlarged group would have a 10 percent market shares in Norway, 40 percent in Finland and 20 percent in Sweden.
The combined group would have 900 branches in seven countries, nearly half a million corporate and institutional customers and 7 million individual customers.
Merita is offering 24.3 billion kronor ($3.08 billion) for Christiania. The bank said it expects to realize cost savings of 80 million euros a year within three years after discounting restructuring costs of 75 million euros.
The bid elicited no immediate response Monday from Norway's financial watchdog, the Norwegian Banking, Insurance and Securities Commission, which must approve any bid in the financial sector. The agency's chief, Bjoern Skogstad Aamo, refused to comment on the offer.
The Norwegian state, which holds 34.6 percent of Christiania bank, is seen as sensitive to cross-border incursions into one of its sovereign sectors.
Norwegian Finance Minister Gudmund Restad said in Oslo that his government policy strives to ensure "stable national ownership." The remarks echo similar recent comments by government officials in France and Italy aiming to create "national solutions" for mergers in the banking and telecom sectors.
Despite the reservations, some analysts said they believe the deal makes sense in the context of accelerating cross-border financial marriages.
"Our initial reaction is that this is certainly an attractive combination for MeritaNordenbanken and fills out their goals of becoming pan-Nordic," John Leonard, a bank analyst with Salomon Brothers in London, told CNNfn. "And the price looks like one that is reasonable for both the Christiania and for the MeritaNordbanken shareholder."
Leonard noted that the pressure towards cross-border consolidation is especially strong in small regions like the Nordic countries, or Benelux, where companies are limited in how much they can accomplish by staying in-market.
Leonard said the reaction of the Norwegian government, which naturally seeks the best value for taxpayers, will be crucial to the outcome of the deal.
Sweden's government has held a 26 percent stake in MeritaNordbanken since its creation in 1997 through a merger of Finland's Merita and Sweden's Nordbanken.
But while the Swedish government apparently has endorsed the deal, the situation may be trickier in Norway, where a minority centrist government holds 42 of the 165 seats in the nation's parliament. Norway's opposition parties reportedly have welcomed the offer, while the governing Christian Peoples' party of Prime Minister Kjell Magne Bondevik termed the offer "delicate." 
-- from staff and wire reports
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