Societe Generale SA, the Paris bank tipped as the most likely takeover candidate among French financial companies, would — if bought — probably fall into the hands of a foreign competitor, analysts and observers say.
Its shares have soared more than 10% in recent weeks amid speculation that it had begun preliminary talks with its Italian peer UniCredit SpA. The stock price is up more than 20% this year.
That potential merger was well-received by analysts, who cited significant synergy potential. UniCredit, however, is still absorbing a major cross-border acquisition.
Other analysts said they had not given up on the possibility of an all-French scenario, including a tie-up with SocGen's domestic rival, BNP Paribas SA, though they acknowledged this would be less likely.
BNP has been linked to SocGen before. When it was in the process of buying Paribas in 1999, BNP also cast its eye on SocGen, but the latter warded off the overture and remained independent.
If BNP and SocGen were to get together, it would create a French banking giant that could compete with global players like Citigroup Inc., Bank of America Corp., and HSBC Holdings PLC.
Talk involving SocGen comes as the Dutch banking giant ABN Amro Holding NV is at the center of a heated takeover battle that pits Barclays PLC against a consortium led by Royal Bank of Scotland.
Europe's largest banks are exploring their potential takeover or merger targets and are asking themselves what their future place will be in a banking sector poised for consolidation.
"SocGen in our view represents the only recognized takeover candidate amongst the French banks," Millan Gudka of Dresdner Kleinwort said.
"You cannot compare ABN's situation to that of SocGen. SocGen is much better managed," another analyst said. A SocGen spokeswoman declined to comment.
