In a surprising move, UniCredit has launched a €10.1 billion offer to acquire Banco BPM, one of Italy’s leading banks. The Italian banking giant has proposed an all-stock transaction, offering 0.175 UniCredit shares for each Banco BPM share, valuing Banco BPM at €6.657 per share, a 0.5% premium over the stock’s last closing price.

The acquisition, announced on Monday, aims to strengthen UniCredit’s position in Italy, a key market, while boosting its competitive standing in Europe. UniCredit emphasized that the deal would deliver significant long-term value for its stakeholders and further enhance its role as a major player in the European banking landscape.

If successful, the merger would create Europe’s third-largest bank by market capitalization, marking a notable shift in the competitive dynamics of the region’s financial sector. However, Andrea Orcel, CEO of UniCredit, reassured the market that the potential acquisition would not affect the bank’s investment in Germany’s Commerzbank, despite ongoing concerns in Germany about the strategic implications of UniCredit’s increasing stake in the German bank.

The bid comes shortly after Banco BPM made headlines by purchasing a 5% stake in Monte dei Paschi di Siena, stoking speculation about future consolidation in Italy’s banking sector. Additionally, Banco BPM has recently proposed a €1.6 billion offer to acquire asset manager Anima Holding, in an effort to diversify its portfolio amid a challenging economic environment.

With mergers gaining momentum across Europe, UniCredit’s move highlights the growing trend of consolidation in the banking industry as institutions seek to scale up and enhance their competitiveness on the global stage. Banco BPM has yet to respond to the offer.