In what would be Europe's largest-ever cross-border deal in banking, Unicredito Italiano SpA of Italy is in advanced talks to buy Germany's HVB Group AG for about €16 billion, or $20.17 billion, according to people familiar with the matter.
The two sides have yet to settle on an exact price in what is expected to be an all-stock transaction, according to people familiar with the situation. Other key issues are still being hammered out as well, and any proposed deal still could founder, these people said.
Unicredito is Italy's largest bank by market value, and HVB is Germany's second-largest by market value after Deutsche Bank AG.
Both Unicredito and HVB have significant operations in the 10 Eastern European nations, including Poland and Hungary, that joined the European Union in May 2004. Together they could create a powerhouse in Eastern Europe, where the banking industry is less developed and where growth rates are faster than in the rest of Continental Europe, which is suffering from a sluggish economy. Since 1999, the 10 new EU states have posted average annual growth rates in gross domestic product of 3.2%, compared with 2% for the other 15 EU member states.
Amid rumors of speculation Thursday, shares of HVB rose 5.1% to a new year-high of €20.65. Unicredito shares slipped to their year low of €4.11.
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