Monte dei Paschi di Siena (MPS) has approved a plan to make dual, all-share takeover bids for Italian rival Banco BPM and wealth manager Banca Generali. This strategic move, spearheaded by MPS CEO Luigi Lovaglio, aims to create a combined banking group with a market value approaching €70 billion, effectively countering a hostile €36 billion takeover offer from sector leader Intesa Sanpaolo. The board's decision, reached on Thursday, saw nine votes in favor and four abstentions after a seven-hour meeting.
The proposed bids involve MPS paying in shares for both Banco BPM, which is valued at €25 billion, and Banca Generali, valued at €8 billion, totaling approximately €33 billion. The plan also incorporates a potential cash dividend for MPS shareholders to garner support. This development marks a significant escalation in the ongoing consolidation within the Italian banking sector. MPS, which had previously acquired merchant bank Mediobanca in a €16 billion hostile bid last year, holds a 13% stake in Generali, an asset valued at €8.5 billion.
The approval comes despite previous discussions between MPS and Banco BPM for a merger of equals collapsing in July due to opposition from Banco BPM's main investor, France's Credit Agricole. The current proposal for Banco BPM proceeds without the advance consent of Credit Agricole, and similarly, the bid for Banca Generali lacks pre-agreement from its controlling shareholder, Assicurazioni Generali. Intesa Sanpaolo's original offer for MPS in June aimed to dismantle the historic Siena institution, planning to sell half of MPS's branches and its stake in Mediobanca, a move criticized by Lovaglio as value-destroying.
