* Offer to run from March 30 to April 21
* Creval to give official opinion on bid in coming days
* Creval expected to reject bid as too low (Recasts merging stories)
MILAN, March 23 (Reuters) - The Italian arm of France’s Credit Agricole said its proposed takeover of rival Creval could generate benefits worth 130 million euros ($155 million) a year, as it prepares to launch the bid next week.
Italy’s fragmented banking market is consolidating in the wake of Intesa Sanpaolo’s takeover of rival UBI last year to create the country’s biggest lender. The pandemic has heightened the need to prop up profits through cost cuts.
The buyout offer by Credit Agricole Italia is set to run from March 30 to April 21 after Italian market regulator Consob on Monday cleared the offer’s prospectus.
Shares in Creval were unchanged on the day at 12 euros on Tuesday. The stock has traded consistently above the bid price of 10.5 euros, in a sign markets are betting on a sweetener.
To expand the group’s footprint in its biggest market after France and double its presence in the industrial Lombardy region, Credit Agricole Italia in November said it would pay 10.5 euros for each Creval share in a 737 million euro buyout offer.
The merger is estimated to yield annual cost savings worth 50 million euros before taxes after the first three years, and additional revenues for 36 million euros after four years at the earliest, Credit Agricole Italia said in the document.
Additional benefits would derive from a lower cost of funding as well as of credit for Creval post-merger, for a total of around 130 million euros, versus a preliminary indication of around 150 million euros given in November.
Credit Agricole Italia estimated integration and restructuring costs from the deal at 345 million euros.
Creval cannot give an official opinion on the bid before the publication of the offer’s prospectus but sources close to the matter have said it will fight for a higher price.
Several Creval shareholders have already said the bid’s price is too low, pointing to incentives for corporate mergers under Italy’s 2021 budget through the use of so-called Deferred Tax Assets (DTAs).
But Credit Agricole Italia said it was not in a position to say at present whether the latest DTA incentives could be tapped.
“It is not certain that DTA rules included in the 2021 budget could be used following the acquisition (of Creval),” Credit Agricole Italia said in the prospectus.
In any case, such rules would only bring forward a portion of the 331 million euro positive impact on regulatory capital from which Creval would benefit anyway, and would entail an additional 66 million euro cost, according to the 2021 budget law. ($1 = 0.8406 euros) (Reporting by Andrea Mandala; additional reporting and writing by Valentina Za; editing by Agnieszka Flak and Susan Fenton)