Bankia: BMN's acquisition to add +120bp to ROTE
Bankia has acquired BMN for €825mn implying a P/VC ratio of 0.47x. The exchange ratio was fixed at 1 Bankia share per 7.82 BMN shares. The management has annonced €155mn of cost synergies pre–tax (representing c. 40% of BMN's cost base) and restructuring costs of €334mn. The impact on 2020e net profit would be €245mn or +21% from our stand–alone estimate of €1,155mn. 2020e EPS may rise to €0.45 or +13.1% from our prior forecast. We have updated our valuation to €4.89 implying a 2020e PER of 10.7x a target P/BV of 0.9x. Buy.
Bankia is a financial institution based in Spain. Co. is primarily engaged in operations in the banking sector. Co.'s business operations are structured into seven areas: Retail Banking, Business Banking, Private Banking, Asset Management and Bancassurance, Capital Markets and Holdings. Co. offers financial products and services to various customer segments, such as individuals, small and medium enterprises, large corporations, as well as public and private institutions. As of Dec 31 2014, Co. had total assets and total customer deposits of Euro233,648,603,000 and Euro106,806,698,000 respectively.
Bankinter S.A. is a Spanish brokerage firm established in 1989. The company's line of business includes the provision of market research and trading services for Equity and Fixed Income products.
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