BNP Paribas, France's biggest bank, has snapped up the government's 10.91% stake in number four bank Credit Lyonnais for €2.2 billion in a surprise weekend auction.
The auction, announced by the French finance ministry on Friday, had been expected to continue with further bids throughout the weekend. But the ministry announced the sale had been concluded late on Saturday, saying the BNP offer had been 'significantly better than those of the other candidates'.
BNP offered to pay €58 for each of the government's 38 million shares in Credit Lyonnais - almost one and a half times their quoted value at Friday's market close - within 24 hours of the auction being announced.
The bank explained its acquisition, and the high premium paid, in a statement that said it 'could not ignore the future of such a large banking company as Credit Lyonnais at a time when the state is withdrawing its capital'.
'The possibilities for cooperation between the two groups, with their very similar cultures and mutual respect for each other's teams, are obvious,' it added.
Credit Lyonnais had sounded less enthusiastic about such a partnership in a statement issued on Saturday before the BNP bid was accepted, paving the way for a possible takeover battle between shareholders.
Denouncing the government's decision to auction the 10.91% stake to the highest bidder, Credit Lyonnais said its acquisition by a new shareholder would be considered hostile. But having until recently held a 1% stake in Credit Lyonnais BNP can argue that it is not a new shareholder. Nevertheless, previous BNP overtures have been repeatedly rebuffed by Credit Lyonnais.
Privatised in 1999, Credit Lyonnais had for months been negotiating the terms of a possible partnership with number two bank Credit Agricole, until now its largest shareholder with 10.5% of its capital. But the talks persistently failed to yield fruit as Credit Lyonnais boss Jean Peyrelevade held out for a share of power equal to Credit Agricole's and that of insurer AGF, another major shareholder with 10%.
The government of Prime Minister Jean-Pierre Raffarin finally lost patience and offered to sell its stake to Credit Agricole last week, which turned down its asking price of €45 per share, prompting the state to turn to an auction as its last resort.
