Monte dei Paschi di Siena (MPS) Chief Executive Officer Luigi Lovaglio declared on Monday that the bank will proceed with its $40 billion all-share bids for Banco BPM and Banca Generali, regardless of the outcome of Intesa Sanpaolo's $35.4 billion hostile takeover attempt. Lovaglio's strategy is aimed at creating Italy's third-largest lender, and he views MPS as a "natural partner for a friendly aggregation." This move is seen as a defensive measure against Intesa's approach, which proposes to break up MPS, a prospect Lovaglio has criticized as value-destroying.
Intesa Sanpaolo, Italy's market leader, received shareholder approval on Thursday for the issuance of up to 5.7 billion new shares to finance its $35.4 billion bid for MPS. This approval brings Intesa CEO Carlo Messina closer to reshaping Italy's financial landscape. Meanwhile, Italian Prime Minister Giorgia Meloni has stated that the government will not intervene in the market-driven banking deals, noting that MPS has become a "gem" attracting significant interest.
MPS's twin bids, valued at approximately $25.3 billion for Banco BPM and $8.7 billion for Banca Generali, would involve offering 1.567 newly issued shares for each Banco BPM share and 6.958 for each Banca Generali share. The offers represent no premium for Banco BPM and a 10% premium for Banca Generali. Analysts from Third Bridge noted that while MPS's plan makes strategic sense, its timing marks it as a purely defensive move against Intesa. The proposed deals align with Rome's long-term goal of fostering a third national bank to rival Intesa and UniCredit, though concerns remain about MPS's capacity to integrate multiple banks simultaneously.
MPS aims for a deal completion by mid-February 2027, anticipating annual pre-tax synergies of around $2.6 billion from the proposed mergers. The plan, approved by a majority of MPS directors, still requires the clearance of at least two-thirds of MPS shareholders, including Delfin and Francesco Gaetano Caltagirone, in a vote scheduled for October 29. Despite the strategic rationale, initial investor reaction to MPS's announcement was subdued, with Banco BPM and Banca Generali shares experiencing slight declines, and MPS shares also slipping.
