Breakingviews - UniCredit’s M&A hunt has more glitter than gold

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Breakingviews - UniCredit’s M&A hunt has more glitter than gold
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Andrea Orcel has a dilemma. Since joining 36 billion euro UniCredit as chief executive in April 2021, the Italian banker has consistently boosted earnings beyond analyst expectations while keeping its capital base solid. The resulting improved valuations should in theory put the veteran dealmaker in a strong position to pounce on a rival. Yet prospective targets may not be as enticing as it might seem.

MILAN, May 3 - Andrea Orcel has a dilemma. Since joining 36 billion euro UniCredit

as chief executive in April 2021, the Italian banker has consistently boosted earnings beyond analyst expectations while keeping its capital base solid. The resulting improved valuations should in theory put the veteran dealmaker in a strong position to pounce on a rival. Yet prospective targets may not be as enticing as it might seem., in which UniCredit had expressed an interest before the Ukraine war, people familiar with the situation had told Reuters Breakingviews.

As Orcel pushed up earnings, UniCredit shares have recovered and their ratio with BPM is now back to where it was before the conflict. Still, the two lenders have diverged operationally: after a better-than-expected quarter UniCredit is now forecasting net earnings of over 6.5 billion euros in 2023, almost double the 3.9 billion euros it delivered in 2021. At 3 euros, its projected earnings per share this year are more than four times the 0.7 euros seen in 2021, Refinitiv data shows.

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