Reuters: Private Equity: UPDATE 1-Fondiaria can still proceed with capital hike

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UPDATE 1-Fondiaria can still proceed with capital hike Apr 27th 2012, 18:10 Fri Apr 27, 2012 2:10pm EDT (Adds comments from sources, Sator, shares) By Elisa Anzolin MILAN, April 27 (Reuters) - An antitrust probe into a planned merger between loss-making Italian insurer Fondiaria-SAI and peer Unipol does not compromise its 1.1 billion euro cash call due in June, the bank heading the consortium for the operation said. The antitrust agency on Thursday suspended a planned four-way merger engineered to rescue Fondiaria for 45 days in order to investigate potential risks to competition from the tie-up, clouding prospects for the deal. "The 45-day period is compatible with a June schedule for the capital increase," Mediobanca Chief Executive Alberto Nagel said on the sidelines of a presentation in Milan. "We will work with the antitrust (agency) to be able to go on the market and raise the capital that is necessary to fix the insurer's ratios," he told Reuters. The merger would create Italy No. 2 insurer after Generali . The antitrust agency is expected to force the new entity to sell assets, possibly attracting foreign buyers such as France's AXA SA, which is seeking to grow in Italy. Fondiaria's solvency ratio - a key measure of financial strength - fell to an alarming 78 percent at the end of 2011. The deal, brokered in January by Mediobanca, Italy's top investment house, has been complicated by a judicial probe and disagreements over share swap ratios, which have hit Fondiaria's shares. A source close to the matter said talks on the share swap ratios would continue so that they could be completed by the end of the 45-day period. The antitrust probe could be extended by another 30 days. A rival bid for Fondiaria tabled by private-equity funds Sator and Palladio Finanziaria could be revised in the light of this week's developments, a source close to the matter said on Friday. Sator's head Matteo Arpe said the fund was working with Palladio ahead of an April 30 deadline for their bid. The funds have argued that all Fondiaria needs is a capital increase to restore its battered solvency ratio. Shares in Fondiaria, which have lost over 70 percent in the last year, ended 2.2 percent lower at 0.903 euros. (Editing by Jane Merriman) Link this Share this Digg this Email Reprints

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