JP Morgan Chase To Buy 22% Stake in Italy’s Fondiaria

U.S. investment bank JP Morgan Chase will enter the convoluted world of Italian finance with its agreement to acquire a 22 percent interest in Italian insurer Fondiaria along with two other investors for € 812 million ($700 million).

The shares will be acquired by Morgan, its Italian counterpart Interbanca and financier Francesco Micheli from Italian insurer SAI, which retains a 7 percent stake in Fondiaria. Last year SAI agreed to purchase 29 percent of the company in a move aimed at merging the two groups to create Italy’s second largest general insurer, but regulators blocked the company from purchasing the shares from Italy’s Montedison due to concerns over SAI’s solvency and its ties to the financial empire of Mediobanca.

Morgan’s investment takes SAI off the hook to pay a €258 million ($222 million) breakup fee to Montedison if it failed to complete the deal. It leaves Mediobanca and SAI with a 21 percent stake in Fondiaria, Morgan with 22 percent and a merger offer on the table from Italian insurer Toro, which is controlled by the Fiat industrial group. Toro had offered to purchase the shares acquired by Morgan at a reduced price if no other buyer could be found.

The situation is still in a state of flux. Fondiaria’s CEO, Robert Gavazzi has said he favors a three-way merger between his company, SAI and Toro (See IJ Website Jan. 15), but whether this will be happen or not is unclear.

Topics Mergers & Acquisitions