BNP faces more hurdles
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March 11, 1999: 9:31 p.m. ET
State weighs in against French bank bid; target Paribas remains resolute
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NEW YORK (CNNfn) - The French government is leading the opposition to the shock bid by Banque National de Paris for Paribas and Société Générale, the two rivals which announced their own merger plan last month. Stocks in the two target banks surged in Paris Thursday, however.
Paribas reiterated its opposition to the BNP bid following a board meeting on Thursday, saying it still regarded the share exchange offer as hostile and reaffirming its faith in its own plan to merge with Societe Generale.
SocGen's board is due to meet on Friday morning to consider the offer.
Earlier on Thursday, the French ministry of finance and the country's central bank issued a joint statement hinting they may intervene "in the national interest" following BNP's surprise move. The ministry fears the $37 billion hostile bid may hinder its plan to privatize troubled Crédit Lyonnais, due later in the year.
BNP chairman Michel Pébereau was on the defensive in promoting the bid to create Europe's largest banking group, with assets of 975 billion euros ($657bn). The lack of detail and his pledge not to cut jobs have diluted possible cost savings and led analysts to question whether it is just a move to frustrate the agreed SG-Paribas link-up.
However, investors excited by BNP's pursuit of the two groups, boosted Paribas stock by 18.09 percent to close at 101.5 euros. SG shares gained 13.33 percent to close at 164.9 euros, while BNP shares' closing price of 83.00 euros was 7.24 percent higher
The hefty premium placed by BNP on Paribas shares could well force the investment bank and SG to sweeten their offer to shareholders. The Paribas board is due to meet later Thursday to discuss the BNP offer. SG directors will meet Friday morning.
The sale of Crédit Lyonnais is required to take place this year under a rescue plan agreed with the European Commission. BNP has already seen its initial interest rebuffed by the French government. SG (PGLE), the dominant partner in the proposed deal with Paribas, has been reported as the front runner to take over the rump of the state-owned bank.
As well as regulatory hurdles in France and Brussels, BNP also faces opposition from the World Jewish Congress in the U.S. The Congress, which is embroiled in Deutsche Bank's takeover of Bankers Trust, says that BNP has failed to cooperate with a class-action suit against French banks alleged to have profited from Holocaust victims.
-- from staff and wire reports
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