M&A advisors lined up for Italy's Generali and Cattolica deal

03 June 2021 Consultancy.eu 2 min. read

Italy’s largest insurer Generali is looking to buy out rival Cattolica Insurance – a year after rescuing the latter through a strategic partnership. Both sides of the table are gearing up for the deal, and several notable consultants will likely come on board. 

Goldman Sachs and Big Four accounting and advisory firm KPMG are currently frontrunners for the much-coveted position of Cattolica’s M&A advisor on the deal – per a Reuters report – while Generali’s consultants are at the time of writing still unknown.

The backstory: Cattolica’s weakened solvency position amid the pandemic-induced economic crisis last year drew an urgent push from Italy’s Insurance Supervisory Authority to raise funds – of at least €500 million. Generali swooped in with the necessary capital in June last year – spread over two separate share capital increases – and took a 24% stake in Cattolica. 

M&A advisors lined up for Italy's Generali and Cattolica deal

KPMG’s corporate finance team advised Cattolica on the deal, which saw the insurer change structure from a cooperative entity to a joint-stock company. For Generali, the deal was an opportunity to market its advanced, tech-powered asset management, health insurance and reinsurance services to Cattolica’s 3.5-million customer base. 

New deal

Now, Generali is gearing up to acquire the entire Cattolica pie – offering existing stakeholders a 15% premium on their investment at €6.75 per share. The deal is under consideration, and Cattolica is expected to tap KPMG again for support. 

There is value on each side: the offer would raise a total of €1.2 billion for Cattolica’s shareholders, and value the company at €1.5 billion. Generali will get a boost in market share:“the acquisition would allow Generali to become the first in the non-life insurance market and to strengthen its presence in the life market,” said the firm in a statement. 

Reports suggest that Generali is pushing for dominance and resilience in Italy’s insurance market – having set aside over €2 billion for acquisitions alone. The Cattolica move will leave enough in the bank for another acquisition in the near future, while funds have also been set aside for further digitalisation and diversification to profitable products and service lines. 

As it stands, Generali has a global operation across over 50 countries – with assets under management of more than €500 billion and nearly €70 billion in gross written premiums.