Italy’s Monte dei Paschi di Siena has launched simultaneous, independent all-share takeover bids worth about €34 billion in total for rival Banco BPM and wealth manager Banca Generali, escalating a battle reshaping Italy’s banking sector.
The bids are chief executive Luigi Lovaglio’s response to a €36 billion hostile takeover launched by sector leader Intesa Sanpaolo in June, which has raised concerns in Rome about a potential reduction in competition in domestic banking.
MPS also proposed an “extraordinary distribution” to its shareholders worth €4 billion compared to€3 billion in cash offered by Intesa.
The dividend from MPS would be partly in cash and partly through Generali shares, representing around 4.5% of the Italian insurer, in which MPS holds a 13.3% stake through investment bank Mediobanca which it acquired last year.
Deal aimed at creating Italy’s third biggest banking group
The announcement failed to impress investors at the market opening: while MPS shares were up 0.7% this morning, those of Banco BPM and Banca Generali were down 0.7% and 1.8% respectively.
Both Banco BPM and Banca Generali declined to comment.
MPS had already explored a potential deal with Banco BPM to thwart Intesa’s takeover, but the two banks ended talks last month after BPM’s main investor, France’s Credit Agricole, expressed its disapproval of the plan.
MPS is the “natural partner for a friendly aggregation,” Lovaglio said when presenting the plan, aimed at creating Italy’s third-largest bank by assets. The new group would rank among Europe’s top 10 banks, he added.
Shareholder vote in October
“We’re not talking about the wind anymore, we’re talking about the destination,” Lovaglio said today, after earlier this month saying MPS could only get ready “to catch the wind, if it changed”.
The plan was approved by a majority of MPS directors, but dissent from a minority underscores the challenges it faces.
MPS shareholders – including Delfin, the vehicle of the Del Vecchio eyewear business dynasty, businessman Francesco Gaetano Caltagirone and the Italian Treasury – will vote on the plan on October 29.
Under Italian takeover rules, any MPS countermeasures to Intesa’s bid require clearance by more than 50% of its shareholders.
The twin deals would generate estimated annual pre-tax synergies of around €2.6 billion, MPS said.
“The offers are designed to create a newly elevated national champion with distinctive capabilities across banking, advisory and wealth management”.
MPS, which has a market value of €36 billion, said it was offering 1.567 newly issued shares for each Banco BPM share and 6.958 for each Banca Generali share, valuing the targets at about €25.3 billion and €8.7 billion respectively.
That would imply offer prices of €16.729 per Banco BPM share, with no premium on Wednesday’s close, and of €74.284 per Banca Generali, a 10% premium, MPS said.
Completion of the deal, including regulatory approval, is targeted by the middle of February 2027.
Bailed out by the state in 2017, MPS was reprivatised in 2023-2024. Through the Mediobanca purchase, it acquired the largest shareholder stake in Generali, a major player in Italy’s financial sector.
Under Intesa’s plan, the Tuscan bank faces a break-up: Mediobanca would remain within the group while half of MPS branches, its Siena headquarters and its brand would be transferred to smaller lender BPER Banca.
Lovaglio has argued that would destroy value and praised recent comments by Italian Prime Minister Giorgia Meloni, who expressed hope that MPS would not be broken up.
