BNP unveils surprise offer for Paribas, SocGen

In what was believed to be the first unsolicited bid in modern French banking history, BNP was offering 11 of its shares for every eight Paribas shares and 15 BNP shares for every seven Societe Generale shares, she said.

A corporate financier said he wasmystified by the BNP plan. "At first glance I can’t see what’s in this for BNP shareholders, but perhaps that will become clearer later," said the London-based financier, who spoke on condition of anonymity.

"This must raise the possibility of a counter-bid for BNP (by takeover targets Societe Generale and Paribas)." The twin BNP offers were initially disclosed by the CMF financial market regulatory agency in a statements issued well after the close of trading on Tuesday. The two target banks are in the throes of a merger of their own, announced on February 1.

Societe Generale and Paribas surprised financial markets in February by announcing a 15.1 billion euro merger that would create France’s largest bank. BNP has been under pressure since then to strike an alliance of its own, but has insisted it would not be rushed into a deal for the sake of a deal. There would be major consequences in terms of staff layoffs from offers she described as "attractive" to the shareholders of the two target banks."There’ll be no collective layoffs, this is important," she said.

BNP’s offer is being presented by Lazard Freres et Cie, Goldman Sachs International and Banexi, BNP’s own investment banking subsidiary, according to the CMF. Societe Generale and Paribas had no immediate comment.

According to the CMF statement, BNP conditioned its offers on its ability to acquire at least a majority of each bank’s outstanding shares. But it reserved the right to pursue the offer even if the targeted percentage is not reached, CMF said.

BNP also conditioned the offers on approval by its shareholders of the issuance of the necessary shares to carry out the takeovers, the CMF said. It said the BNP board of directors had pledged at a meeting held on Tuesday to submit the necessary resolutions to its shareholders. The CMF said it had asked the Paris bourse to suspend trade in the shares of all three banks.

Societe Generale and Paribas surprised financial markets in early February by announcing a 15.1 billion euro mergerthat would create France’s largest bank and fuel the global trend towards fewer, but larger, financial institutions.

BNP has been under pressure since then to strike an alliance of its own, but has insisted it would not be rushed into a deal for the sake of a deal. Chairman Michael Pebereau told a news conference this month BNP would consider "opportunistic" external growth only if it created shareholder value and did not endanger performance goals.

BNP also said last month it was interested in an "industrial project" with state-owned Credit Lyonnais, which is to be privatised later this year. It was not immediately clear how the new offers would affect those plans.