By Valentina Za

MILAN (Reuters) – UniCredit on Friday filed its buyout offer for rival Banco BPM with Italy's market regulator, and CEO Andrea Orcel stated that the price was adequate.

The filing makes the €10 billion ($10.5 billion) all-share offer, which UniCredit announced on Nov. 25, binding and sets a price floor. UniCredit also applied for regulatory approval from relevant authorities.

Shares in Banco BPM closed at €7.846 on Friday, significantly above the €6.657 per share being offered by UniCredit based on the bid's exchange ratio, indicating that investors expect an improvement in the proposal.

"We consider our initial offer to Banco BPM shareholders to be fair and appropriate," Orcel remarked in a statement.

Any deal must create shareholder value and outperform any UniCredit share buyback, he emphasized. An M&A veteran, Orcel aims for any deal to provide at least a 15% return.

In announcing the bid for BPM, Orcel indicated that UniCredit could consider augmenting it with cash in the future.

"We remain committed to our disciplined approach to all M&A, with any transaction needing to demonstrate a strategic fit and meet, or exceed, our core financial metrics," he stated.

While BPM has long been a target for UniCredit, Orcel, who built his wealth as a banking merger adviser, had previously resisted acquiring BPM, partly due to the M&A premium reflected in BPM's share price, sources told Reuters.

Increasing domestic consolidation ultimately pressured his decision.

Orcel urged that BPM investors would benefit more from holding UniCredit shares because of its greater resilience and diversification going into a challenging year, alongside a twofold higher total distribution yield.

UniCredit is offering 175 newly issued shares for every 1,000 BPM shares, representing a mere 0.5% premium to BPM's share price prior to the bid.

UniCredit asserts that the terms offer a 15% premium to BPM's share price before BPM's bid for fund manager Anima Holding on Nov. 6, a move that spurred growth in the stock values of both Anima and BPM.

"Given the robustness of our approach, the premium proposed, and the situation remaining unchanged from when we made our original offer, we are proceeding on these terms," Orcel explained.

UniCredit has also invited BPM's largest shareholder, Credit Agricole (OTC:CRARY) (CA), to discussions expected to concentrate on commercial partnerships.

CA collaborates with both BPM and UniCredit. To bolster its negotiating position, CA has applied to the ECB for a 19.99% stake in BPM and increased its BPM stake to 15% from slightly under 10% through derivatives.

"We are continuously discussing with all relevant stakeholders," Orcel commented.

($1 = €0.9528)