BNP Paribas announced a €5.5 billion discounted rights issue today to help finance its proposed €9 billion takeover of Italy's Banca Nazionale del Lavoro (BNL).
The French bank said it would issue new shares at €65.40 each, a discount of 15.5 per cent to yesterday's closing price of €77.40 and a discount of 12.6 per cent stripping out the dividend payment for 2005.
BNP Paribas said it would give a parity of one new share for every 10 existing ones. Subscription to the newly issued shares will start on Tuesday and close on March 20th.
The bank has agreed to purchase 48 per cent of BNL, Italy's sixth-largest bank by assets, from a group a key shareholders at €2.925 a share. It plans to launch a bid for the rest of BNL at the same price.
French Insurer AXA, which owns 5.7 per cent of BNP Paribas, will subscribe to the offering, the French bank said.
BNP is proposing to issue 84,033,110 new shares.
BNP Paribas said it was not worried that its proposed takeover of BNL could be blocked for political reasons.
The bid comes after the French government angered Italians after announcing last weekend the merger of French utilities Suez and state-owned Gaz de France in what looked like an attempt to fend off an approach on Suez from Italian rival Enel .