Italian bank Unicredit has agreed to buy smaller rival Capitalia for more than $29 billion (€21.4845 billion) in shares to create Europe's second biggest bank.
Both banks approved the takeover yesterday after they won the backing of a key group of investors controlling about 31 per cent of Capitalia.
The merger cements Unicredit's position as Italy's largest bank by market value and ends years of speculation as to who would carry off Rome-based Capitalia in a rapidly consolidating industry.
Unicredit will pay 1.12 of its shares for each Capitalia share, valuing Capitalia at €8.41 a share or €21.83 billion, according to Unicredit's last share price before their trade was halted on Friday.
The takeover enables the new Unicredit, with a combined market capitalisation of more than $135 billion, to expand on its home turf in a challenge to larger domestic rival Intesa Sanpaolo.
It also keeps Capitalia, Italy's third-largest bank, out of the hands of prospective foreign buyers.