Monte dei Paschi bids for Mediobanca as Italian | Stock News

By Valentina Za and Gianluca Semeraro

MILAN (Reuters) -State-backed Monte dei Paschi di Siena on Friday joined within the consolidation wave sweeping Italian banking with a shock 13.3 billion euro ($14 billion) all-share offer to buy service provider bank Mediobanca (OTC:).

The takeover offer, which was welcomed by the federal government, comes after the failure of Italy’s earlier makes an attempt to return Monte dei Paschi (MPS) to the personal sector.

UniCredit, beneath CEO Andrea Orcel, ditched a proposed MPS acquisition in 2021 and bid as a substitute in November for Banco BPM. This scuppered the Treasury’s plan to seek out a companion for MPS, which has been the nation’s greatest banking headache for a decade.

MPS, rescued by a authorities bailout in 2017, is offering 23 of its own shares for each 10 Mediobanca shares tendered, equal to a 5% premium versus Thursday’s closing price.

MPS CEO Luigi Lovaglio, a veteran banker who presided over the Siena-based bank’s turnaround, stated the offer was meant as “friendly” and centred on preserving the Mediobanca identify for investment banking.

“We have no plans to make Mediobanca disappear,” Lovaglio stated. “I don’t even have the skills to be a CEO of an investment banking business.”

An individual close to the matter informed Reuters Mediobanca noticed the offer as not beforehand agreed, although not surprising.

Markets weren’t impressed, with MPS’s shares down 8% in late morning trading. Analysts have been additionally cautious concerning the possibilities of success and execution dangers.

Deputy Prime Minister Antonio Tajani was constructive concerning the offer. “Any market initiative aimed at strengthening our banking system, which is already healthy, is welcome,” he stated.

Mediobanca, centered on investment banking, wealth management and client finance, has a market worth of 12.7 billion euros, above MPS’ 8.8 billion euros.

However MPS has 3 billion euros in tax credit stemming from previous losses which it will probably use within the deal, including 500 million euros a 12 months to income for six years. It targets a 100% dividend payout ratio.

BILLIONAIRE SHAREHOLDERS

The buyout offer comes after Italy offered some of its holding in MPS in November, which introduced in shareholders Delfin, the holding company of late billionaire Leonardo Del Vecchio, and fellow tycoon Francesco Gaetano Caltagirone.

Delfin is the largest shareholder in Mediobanca with 19.8% whereas Caltagirone owns 7.8%.

Delfin practically tripled its initial MPS holding to 9.8% in January, first raising the prospect of a potential deal.

MPS shares have more than tripled in worth since November 2022 when Lovaglio pulled off a make-or-break money call to fund hundreds of workers layoffs and drive income via value cuts.

With rates of interest set to fall, banks are beneath strain to seek out completely different sources of revenues.

Lovaglio informed analysts: “Even if it’s something that is difficult … there is a strong rationale.”

“We will have a combination of revenues that will make us stronger … to face a landscape that can be even more difficult than the current one.”

Mediobanca is the biggest investor in insurer Generali (BIT:), which accounts for over a third of its income. MPS can benefit from that and likewise look to Generali when its insurance coverage partnership with AXA ends in 2027, Lovaglio stated.

Mediobanca made its identify as an M&A boutique and lender to Italy’s greatest corporations earlier than switching to wealth management beneath CEO Alberto Nagel.

Its main shareholders Delfin and Caltagirone have been important of Nagel, accusing him of relying excessively on Generali.

MPS, which goals to take Mediobanca personal, estimated pre-tax advantages of 700 million euros a 12 months from the tie-up.

The finalisation of the exchange deal is anticipated by end-September.

PRIVATISATION DRIVE

Caltagirone and Delfin are additionally giant Generali shareholders, accounting for nearly a third of its capital base together with Mediobanca’s holding.

Caltagirone, who had initially purchased 3.5% of MPS, elevated the stake to five% in November. Italy has decreased its MPS stake to 11.7% from the initial 68%.

After UniCredit walked away from MPS, mid-sized rivals Banco BPM and BPER have been left as the one two potential companions. Banco BPM in November grew to become an MPS shareholder alongside Delfin and Caltagirone.

MPS’ bid for Mediobanca will take away a potential defence option for BPM, which had thought of whether or not it may pursue an MPS deal to fend off the UniCredit takeover.

($1 = 0.9568 euros)