In a move reflecting the consolidation trend in Italian banking, state-supported Monte dei Paschi di Siena surprised the market by announcing a 13.3 billion euro ($14 billion) all-stock bid to acquire merchant bank Mediobanca on Friday.
Following previous failed attempts to privatize Monte dei Paschi (MPS), UniCredit, led by CEO Andrea Orcel, diverted from its proposed MPS acquisition in 2021, opting instead to pursue Banco BPM in November. This shift thwarted the government's plan to find a partner for MPS.
MPS, which was bailed out by the government in 2017, proposes exchanging 23 of its shares for every 10 shares of Mediobanca, offering a 5% premium over the prior day's closing price.
MPS CEO Luigi Lovaglio emphasized the friendly nature of the offer, underlining the intention to maintain Mediobanca's identity in investment banking. Lovaglio stated, We have no plans to make Mediobanca disappear, expressing his lack of experience in leading an investment banking enterprise.
Market reaction to the takeover bid was lukewarm, with MPS's shares declining by 8% during late morning trading. Analysts expressed skepticism about the potential success and risks of implementation.
Deputy Prime Minister Antonio Tajani viewed the offer positively, stating, Any market initiative aimed at strengthening our already robust banking system is welcome.
Mediobanca, focused on investment banking, wealth management, and consumer finance, holds a market value of 12.7 billion euros, surpassing MPS' value of 8.8 billion euros. Despite this, MPS possesses 3 billion euros in tax credits from past losses, a resource it can leverage in the acquisition.
The completion of the transaction is anticipated by the end of September.