Monte dei Paschi launches €13bn takeover offer for Mediobanca #ItalyFinance

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Monte dei Paschi di Siena has launched a €13.3bn takeover offer for larger rival Mediobanca in a move that would shake up Italy’s banking sector.

The all-share offer by the partially state-owned bank for one of Italy’s most prestigious financial institutions came at a slim 5 per cent premium to Mediobanca’s closing price on Thursday. Shares in MPS fell 8 per cent on Friday, while Mediobanca’s stock rose close to 5 per cent.

The move by MPS, the world’s oldest bank, comes during a period of turmoil in the Italian banking industry, with a series of mergers and acquisitions under way that could reshape the power dynamics of the country’s financial sector.

The Italian government, which bailed out MPS in 2017, remains its largest shareholder. But the government has sharply cut its stake over the past year, from more than 60 per cent to less than 12 per cent, as a turnaround under chief executive Luigi Lovaglio has roughly doubled MPS’s share price.

The sell-down has handed stakes to two billionaire-backed players in Italian finance: Delfin, the holding company of the billionaire Del Vecchio family; and Roman building tycoon Francesco Gaetano Caltagirone, whose son now sits on MPS’s board.

Delfin has tripled its stake since its original purchase in November to just under 10 per cent, while Caltagirone holds 5 per cent.

The Del Vecchios and Caltagirone are also the largest shareholders in Mediobanca, where they hold combined stakes of close to 30 per cent but have been at odds with chief executive Alberto Nagel for years.

In turn, Mediobanca, Delfin and Caltagirone are the top three shareholders in the Italian insurer Generali, where Caltagirone has been at odds with management.

MPS’s bid for Mediobanca comes after Generali this week struck a deal with Natixis of France to create a European asset management giant.

The move was criticised by Rome, which voiced concerns about the possibility of Italian savings being managed abroad and the risk of capital flight from the country. Caltagirone also opposed the tie up with Natixis, according to people with knowledge of the deliberations.

The Italian government had previously hoped to merge MPS with Banco BPM to create a domestic banking champion to compete with larger rivals Intesa Sanpaolo and UniCredit.

But those plans were thwarted after UniCredit, which is also pursuing a tie-up with German rival Commerzbank, launched a “hostile” takeover offer for Banco BPM in November. BPM, which is attempting to fend off the pursuit, had already launched a takeover offer of its own for local asset manager Anima.

MPS said on Friday that it expected a tie-up with Mediobanca to generate €700mn a year in pre-tax synergies. The deal “aims to deliver significant profitability levels and to maintain a solid capital position”, it added.

Under the terms of the offer, Mediobanca investors would receive 23 new shares in MPS for every 10 Mediobanca shares they hold. MPS has a market capitalisation of about €9bn while Mediobanca’s equity is worth €12.7bn.