To thwart a hostile takeover by Intesa Sanpaolo, Italy’s Monte dei Paschi di Siena on Friday offered separate all-share bids totaling roughly €34 billion ($40 billion) for Banco BPM and Banca Generali.
Instead of accepting Intesa’s €36 billion cash-and-share offer, which has sparked competition worries in Rome, MPS CEO Luigi Lovaglio is attempting to maintain the historic bank’s independence and create Italy’s third-largest lender with the offers.
Lovaglio stated that MPS was the “natural partner for a friendly aggregation” and that the proposed merger would place it in the top ten banks in Europe.
Additionally, MPS planned to provide its shareholders with an extraordinary distribution of €4 billion, consisting of €1 billion in cash and the remaining amount in Generali shares owned by the bank.
This amounts to about 4.5% of the Italian insurance company Generali, in which MPS owns a 13.3% share through the investment bank Mediobanca, which it purchased last year.
As part of its acquisition offer, Intesa is giving MPS investors €3 billion in cash.
INVESTORS ARE NOT IMPRESSED BY THE ANNOUNCEMENT
However, investors were not impressed by the statement, and by 11:45 GMT, Banco BPM and Banca Generali shares were down 0.5% and 2.6%, respectively, while MPS was down 0.8%.
To prevent Intesa’s takeover, MPS had previously investigated a possible agreement with Banco BPM; however, the two banks terminated negotiations last month after BPM’s principal investor, France’s Credit Agricole, voiced disapproval of the plan.
The MPS plan made strategic sense, but its timing made it “a purely defensive move” against Intesa’s strategy, according to analysts at research company Third Bridge.
Rome’s long-term objective of establishing a third national bank to compete with Intesa and UniCredit was in line with the proposed mergers. However, the question of whether MPS could “realistically integrate multiple banks at the same time” was raised.
OCTOBER SHAREHOLDER VOTING
Regarding the plan, which was accepted by the majority of MPS directors but is opposed by some, Lovaglio stated, “Our goal is clear to create a stronger, more diversified, more resilient institution.”
At least two-thirds of MPS shareholders, including tycoon Francesco Gaetano Caltagirone and Delfin, the vehicle of the Del Vecchio eyeglass dynasty, must approve the plan in a vote set for October 29 in accordance with Italian takeover regulations.
According to MPS, which is aiming for a deal completion date of mid-February 2027, the twin mergers would produce anticipated annual pre-tax synergies of about €2.6 billion.
With a market value of €36 billion, MPS will offer 1.567 newly issued shares for every Banco BPM share and 6.958 for every Banca Generali share, valuing the goals at roughly €25.3 billion and €8.7 billion, respectively.
According to MPS, this would suggest offer prices of €74.284 per Banca Generali, a 10% premium, and €16.729 each Banco BPM share, with no premium at Wednesday’s closing.
MPS was reprivatized in 2023 and 2024 after receiving a public bailout in 2017.
Intesa is proposing to split it up, with Mediobanca staying in the group while the smaller lender BPER Banca would receive half of the MPS branches, its Siena headquarters, and its brand.
Lovaglio has contended that would undermine value and applauded recent remarks made by Giorgia Meloni, the prime minister of Italy, expressing optimism that MPS will remain intact.
