Business Case Studies, Mergers, Acquisitions and Takeovers Case Study, Sanpaolo,Consolidating its Presence in Albania

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Case Title:

Sanpaolo: Consolidating its Presence in Albania

Publication Year : 2006

Authors: Joy Chakraborty, Snehasish Chaudhuri

Industry: Banking, Insurance and Financial Services

Region:Albania

Case Code: MAA0115K

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
The Turin-based Italian bank, Sanpaolo IMI S.p.A agreed in 2006 to acquire 80% stake of the Tirana-based American Bank of Albania in a deal that would value the Albanian vendor at $156.9 million (EUR124.91 million). The US-based $30 million (EUR24 million) Albanian American Enterprise Fund (AAEF), which was the sole shareholder of the American bank had already confirmed the preliminary agreement between the banks. The transaction, subject to regulatory approvals, would be officially through after it gets the nod from the supervisory authorities of Italy and Albania. The US Corporation had even agreed to offer the Italian bank the remaining 20% stake of the American Bank of Albania to fulfill the acquisition process in toto. Analysts believed that the deal would enable the Italian bank to reinforce its presence in Albania. Together with Banca Italo Albanese and the American Bank of Albania, the Italian bank would capture a market share of 20.6% in loans and 15.3% in deposits that would make the combined entity the second-largest bank in Albania. With a total distribution network of 24 branches and a multi-specialist bank set-up, the new entity could develop a strong retail network in Albania. The transaction with Sanpaolo would effectively enhance the development of the Albanian economy through providing regional growth opportunities in Kosovo, Macedonia and Montenegro. The capital generated through this high-profile transaction would benefit the Albanian bank in particular to enable it to strengthen its position in the country. Together with Sanpaolo IMI Group, the Albanian lender would be uniquely positioned to share the strengths and financial knowledge in direct financing for major projects as well as in the specific expertise of Bonds issues.

Pedagogical Objectives:

  • To understand the role of mergers and acquisitions in the growth strategy of Sanpaolo
  • To analyse the benefits and drawbacks of mergers and acquisitions associated with banking companies
  • To study the impact of the acquisition on the Albanian banking sector
  • To understand the potential synergies of the acquisition
  • To understand the pros and cons of the Albanian Banking sector reforms.

Keywords : Mergers,Acquisitions,Alliances Case Study;Turin; Albanian American Enterprise Fund (AAEF); Albania; Banca Italo Albanese; Sanpaolo; Tirana; American Bank of Albania (ABA); Compounded annual growth rate (CAGR); Gross domestic product (GDP); Italian Albanian Bank (IAB); Return on assets (ROA); Return on equity (ROE); Albanian banking market; Italy; Tax

Contents : 
Bank of Alexandria (BoA)
Expected Synergy
Organization Structure of the Gruppo Sanpaolo IMI
Historical development of Sanpaolo IMI S.p.A
Ratings assigned to Sanpaolo IMI S.p.A
Earnings Per Share of Bank of Alexandria over two years
Customer Deposits of Bank of Alexandria

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