Italy’s Mediobanca struck back today in its fight for independence by announcing a €6.3 billion offer for private bank Banca Generali to be financed by using its stake in insurer Generali.
Mediobanca is trying to thwart a takeover attempt by state-backed Monte dei Paschi di Siena. Italy is seeing a raft of hostile bids, historically a rare occurrence in banking, as lenders are bracing for slowing revenue, with interest rates declining after fuelling record profits in recent years.
Mediobanca CEO Alberto Nagel had long targeted buying Banca Generali from Generali to strengthen Mediobanca’s wealth management business.
At least one previous attempt had not been successful and contributed to heightening long-running friction between Nagel and two dissenting shareholders in both Generali and Mediobanca.
Mediobanca said the acquisition would double its wealth management revenues, lifting them to 45% of the total.
It added it intended to renew the partnerships Banca Generali had with Generali in insurance and asset management, expanding them to the new combined entity.
“Through this large-scale reallocation of capital to wealth management, the combination will transform the relationship between Mediobanca and Generali from a financial investment to a strong industrial partnership,” it said.
Mediobanca unveiled the bid for Banca Generali after scoring a victory on Thursday against the two dissenting investors in both Mediobanca and Generali, as other shareholders in Generali voted to keep Mediobanca-backed CEO Philippe Donnet in the top job at the insurer.
The two shareholders, construction magnate Francesco Gaetano Caltagirone and Delfin, the investment vehicle of Italy’s Del Vecchio family, have also become investors in MPS, and given their support to its buyout offer for Mediobanca.
Delfin and Caltagirone together own around 27% of Mediobanca, roughly 17% of Generali and nearly 20% of MPS.
Due to the MPS bid and Italian takeover rules, Mediobanca needs to secure shareholder approval for the Banca Generali acquisition, which it will seek on June 16.
Mediobanca is the largest investor in Generali, which accounts for over a third of its income. Its 13% stake is worth around €6.5 billion at current market prices.
Assicurazioni Generali owns 50.2% of Banca Generali. The two directors appointed by Delfin, which is the main investor in Mediobanca, failed to back the Banca Generali bid, Mediobanca said.
Delfin and Caltagirone have accused Nagel of relying excessively on income from the Generali stake and exercising excessive influence over the insurer.
The exchange offer, which Mediobanca said it expects to complete by end-October, translates to a deal price of €54.17 a share, an 11% premium to Banca Generali’s last close.
