By Valentina Za and Cristina Carlevaro
MILAN (Reuters) -Italian private bank Banca Generali (BIT:GASI) on Monday said it was launching a 98 million euro ($109 mln) all-cash buyout bid for Intermonte, to take the Milanese broker private and direct its services at Banca Generali clients.
Shares in Intermonte failed to start trading at the market open, and were last indicated up 19.6%, broadly in line with the 21.9% premium over Friday's closing price of 2.49 euros being offered by Banca Generali, shares of which were flat.
The deal highlights rising competition in the wealth management sector, where players that cannot compete in terms of scale are looking for market niches and a specialised product offer.
Banca Generali said the acquisition would allow it to bring in house Intermonte's equity and Exchange-Traded Funds (ETF) trading operations, as well as its derivatives business, with the possibility of devising new products.
Intermonte's investment banking capabilities would be useful to the small business owners that bank with Banca Generali who, in addition to wealth management, also need corporate advisory services, it added.
Wealth managers such as Banca Generali are increasingly focused on the succession issues faced by the myriad Italian businesses that sprang up during the post-war boom.
As founders look to retire and are often unable to pass on the family business to heirs, they became the ideal target for financial firms that provide both corporate and investment banking services as well as wealth management solutions.
Like rivals such as Banca Mediolanum and Fineco, Banca Generali operates through a network of financial advisers, without proper branches. It manages 99 billion euros in assets on behalf of 355,000 customers.
It is offering 3.04 euros for each Intermonte share and said, without giving further details, that cost savings and projected revenue benefits are such that the return on the investment will be above Banca Generali's cost of capital.
Banca Generali, owned by Italy's biggest insurer Generali, said Intermonte's controlling shareholders, who own 52% of its capital, had already agreed to the offer.
Intermonte separately said its board would soon start assessing the bid.
UBS and law firm Cappelli Riolo Calderaro Crisostomo Del Din & Partners are advising Banca Generali.
($1 = 0.9011 euros)