Farmer's market

16 December 2002 By Jonathan Ford

Farmer's market

16 December 2002 By Jonathan Ford

Agricole has stretched itself to the limit in its determination to see off BNP Paribas. If it succeeds, it may do so at the expense of shareholder value.

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Credit Agricole has launched an agreed bid for Credit Lyonnais valuing the French bank at about E19bn. The move is designed to see off BNP Paribas, which has also been pursuing Lyonnais. BNP said last week it would not stand in the way of Agricole if it made an acceptable bid.

Agricole is offering 5 of its own shares and E148.24 of cash for every 4 Lyonnais shares. Based on Friday's closing price of E15.15 per Agricole share, that values each Lyonnais share at E56. BNP paid an average of E55 a share for its stake in Lyonnais.

Investors in Lyonnais' shareholder pact – which collectively hold 26.5% have indicated their intention to tender their shares to Agricole. Together with the 17.4% Agricole holds already, that means the bank owns, or has undertakings from investors over, 43.9% of Lyonnais.

Jean Laurent will be chief executive of the enlarged Agricole, with Dominique Ferrero, chief executive of Credit Lyonnais, as his deputy. Agricole believes that it can extract cost savings of some E760m before tax from integrating Lyonnais. These will come largely from investment and wholesale banking.

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