Monte dei Paschi di Siena (MPS), Italy's third-largest and the world's oldest bank, is considering defensive share swaps to fend off a $35 billion unsolicited takeover bid from Intesa Sanpaolo. MPS CEO Luigi Lovaglio proposed swaps with Italy's fourth-largest bank, Banco BPM, and with Banca Generali, the wealth manager of Italy's top insurer Generali. Another defensive option being weighed is an extraordinary dividend for MPS shareholders. This move comes after Intesa Sanpaolo made its bid on Monday, offering 1.6 Intesa shares plus $1 in cash for every MPS share, representing a 12.5% premium to MPS's closing share price the previous Friday.
Intesa's bid aims to create the eurozone's second-largest lender by market capitalization, behind Spain's Santander. To address potential antitrust concerns, Intesa has a deal in place with insurer Unipol to sell 635 MPS branches and the MPS brand, which Unipol would then combine with BPER Banca, where Unipol is a major shareholder. The Italian government has indicated a neutral stance on Intesa's move, despite having bailed out and re-privatized MPS in recent years, with its stake now at 5%. Lovaglio has expressed strong opposition to Intesa's bid, arguing that MPS is a strategic asset and its potential split could weaken Italy's competitive fabric.
Intesa's offer followed an earlier approach from Banco BPM regarding a merger with MPS. Intesa CEO Carlo Messina, who is confident in securing shareholder support for his bid due to good relations with leading MPS investors like Delfin and Francesco Gaetano Caltagirone, characterized Banco BPM's approach as merely a "love letter." The combined entity resulting from Intesa's acquisition of MPS is projected to have a market capitalization of $126 billion and a net income goal of $16 billion by 2029. Intesa also plans to retain MPS's 13% stake in Generali, acquired through Mediobanca, and its holding in Mediobanca itself.
