Monte dei Paschi readies twin takeover bids for Banca Generali and Banco BPM
Plan would create an Italian banking group with a combined market valuation of about €70bn
Monte dei Paschi di Siena is preparing twin bids for Banca Generali and Banco BPM, in a bold move as it races to fend off a hostile takeover by Intesa Sanpaolo.
Two people close to the Italian bank said on Thursday that a majority of its board had backed a plan that would create a banking group with a combined market valuation of about €70bn.
The plan consists of separate all-share bids for Banca Generali — the wealth management arm of insurer Generali — and Banco BPM. Banca Generali has a market capitalisation close to €8bn while Banco BPM’s market value is just over €25bn. The plan also envisages a cash dividend for MPS shareholders, the people said.
MPS’s planned double bid is the latest twist in a protracted run of consolidation of Italian financial services groups and comes after Intesa Sanpaolo in June launched an unsolicited takeover offer for MPS, valuing the lender at around €36bn based on current market prices.
Intesa’s plan if it manages to acquire MPS includes breaking up the Siena-based lender and selling half of MPS’s roughly 1,260 branches, its historic brand and much of its central infrastructure to insurer Unipol.
Intesa, Italy’s largest banking group, would retain the remaining branches as well as Mediobanca, which MPS took over last year, making it the largest shareholder in insurer Generali.
MPS chief executive Luigi Lovaglio faces an uphill battle to fend off Intesa and create an enlarged banking group through simultaneous takeover bids with MPS’s board and shareholders remaining deeply divided.
Talks with Banco BPM over a “merger of equals” broke down last month, scuppering what appeared to be the most viable option for MPS to fend off Intesa’s approach.
The talks collapsed after Crédit Agricole said it had not been involved in the discussions and made clear that no deal could proceed without its support.
The FT reported this month that MPS was considering a takeover of Banco BPM after the informal “merger of equals” talks broke down. People close to the discussions said MPS’s proposal to take over Banco BPM had not been agreed in advance with Generali or Crédit Agricole, whose support would be needed because of the size of its holding.
Crédit Agricole’s deputy chief executive Jérôme Grivet said last month: “Nothing can happen against us or without us.”
MPS’s proposed bid for Banca Generali would also make Generali’s support pivotal as the insurer would have to decide whether to tender its controlling stake in the lender in return for shares in its own largest shareholder MPS. Tendering its shares would be likely to attract scrutiny from Generali’s independent directors under its so-called related-party transaction rules.
Lovaglio’s latest plan is broadly consistent with the Italian government’s original ambitions for MPS to become part of a large, Italian-focused banking group capable of competing with the country’s two dominant lenders, Intesa and UniCredit.
Rome began privatising MPS two years ago following its 2017 nationalisation but still retains a small stake.
In an interview with Italian financial daily Milano Finanza, Prime Minister Giorgia Meloni last week said that she hoped MPS would not end up “broken up”, losing its name and identity.
Banca Generali and Banco BPM declined to comment.