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Italy’s bailed-out Monte dei Paschi di Siena on Friday launched a 13.3 billion euro ($13.95 billion) all-share takeover offer for larger domestic peer Mediobanca.
Shares of Monte dei Paschi (MPS) were down 7.97% at 11:39 a.m. London time, with Mediobanca up 6.28%.
Offering 23 of its shares for 10 of its acquisition target, Monte dei Paschi values Mediobanca’s stock at roughly €15.992 each, a 5% premium to the close price of Jan. 23. The proposal will have to be approved at a shareholder meeting on April 17.
The equity of Monte dei Paschi was worth 8.7 billion euros as of the Jan. 23 close, while Mediobanca’s market capitalization stood at at 12.3 billion euros, according to FactSet data.
CNBC has reached out to Mediobanca for comment.
Under the offer terms, Monte dei Paschi estimates pre-tax benefits of 700 million euros a year from the transaction, which would help it to leverage tax credits from previous sustained losses and add 500 million per year for the next six years.
The lender, which intends to delist Mediobanca, hopes to close the transaction by the end of September, Monte dei Paschi CEO Luigi Lovaglio said in a briefing.
“Mediobanca is the best fit at the best time for a powerful business combination,” he added. “We will leverage on the excellence of the two brains, preserving their unique positioning. The new Italian champion will be resilient with [a] diversified business mix.”
In a Friday note, KBW Analysts Hugo Cruz and Ben Maher noted the proposal has “limited” synergy potential and chances of success.
Monte dei Paschi, the world’s oldest bank, required a state rescue in 2017 after years of crippling losses, but has turned the tides of its fortunes under the leadership of UniCredit veteran Lovaglio. The Italian government retains a 11.73% stake in the lender, after decreasing its position in a bid to reprivatize the lender.
Delfin, the holding company of late billionaire Leonardo del Vecchio, has increased its position to 9.78% since January, with business tycoon Francesco Gaetano Caltagirone now holding 5.03%. Delfin and Caltagirone are the largest shareholders of Mediobanca, with 19.8% and 7.8%, respectively.
“The transaction could contribute to complete the dynamics of the Italian financial system, in the context of strong consolidation,” Italian banking union Fabi said after the offer announcement, according to a CNBC translation. “MPS, historically at the center of complex events, is now moving in an ambitious direction. The bid confirms, among other things, that MPS has completely recovered.”
Amid a helpful high-interest environment, Monte dei Paschi was last year able to offer its first dividend in 13 years, posting a CET1 ratio — a measure of a bank’s strength and resilience — of 18.3% in the third quarter.
The Friday offer adds to a picture of heating M&A appetite in Italy’s banking and financial services sector, where the country’s second-largest bank UniCredit previously offered to buy out Banco BPM, which in turn seeks to acquire fund manager Anima Holding. Monte dei Paschi was itself a potential takeover target for UniCredit until talks recently collapsed in 2021.
— CNBC’s Silvia Amaro and Ganesh Rao contributed to this report.
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