Monte dei Paschi di Siena plans to acquire Mediobanca for 13.3 billion euros, offering 2.3 new shares per Mediobanca share, reflecting a 5.03% premium. This move aims to create a national banking champion, positioning MPS as Italy’s third-largest banking entity. The acquisition, supported by significant shareholders, could lead to a major financial conglomerate, enhancing MPS’s profitability and tax advantages while restructuring the banking landscape in Italy.
Monte dei Paschi di Siena’s Ambitious Acquisition Plans
The partially state-owned Monte dei Paschi di Siena (MPS) is set to make a bold move by proposing the acquisition of Italy’s leading investment bank, Mediobanca, for a staggering 13.3 billion euros. This initiative marks a significant chapter in the ongoing consolidation wave within Italy’s banking sector. MPS has offered 2.3 new shares for every share of Mediobanca, which equates to a price of 15.992 euros per share, reflecting a premium of 5.03 percent above Mediobanca’s recent closing price. Following this announcement, Mediobanca’s shares surged over 6 percent on the stock market, while MPS shares experienced a decline of more than 5 percent.
Aiming for a National Banking Champion
Monte dei Paschi has articulated its vision to establish a formidable new national champion in the banking landscape, aspiring to become the third-largest entity in Italy across critical sectors such as asset management, retail banking, consumer credit, and mergers and acquisitions. Based on the current market valuations, this new banking entity could potentially be valued at around 22 billion euros.
This unexpected maneuver from the world’s oldest bank comes as a surprise, particularly given its previous struggles. After a state capital injection of 5.4 billion euros in 2017, many anticipated that MPS would become a target for acquisition rather than pursuing one itself. Recently, Italy’s third-largest bank, BPM, acquired a 5 percent stake in MPS. However, BPM is also facing its own takeover bid from Italy’s second-largest bank, Unicredit, which is looking to acquire BPM for 10 billion euros.
“Through this strategic industrial transaction, we aim to redefine the consolidation of the banking sector, creating immediate value for both MPS and Mediobanca shareholders, and for the country as a whole,” stated MPS CEO Luigi Lovaglio.
The acquisition could pave the way for the emergence of a vast new banking and insurance conglomerate in Italy. It is likely that the offer was made with the backing of significant shareholders, including Francesco Caltagirone, a prominent construction and media tycoon, along with the Delfin holding, which represents the heirs of the late Leonardo Del Vecchio, the major shareholder of Essilor Luxottica. Together, these shareholders possess 14.8 percent of MPS and a significant 29.72 percent stake in Mediobanca.
In the prospective new entity, Delfin would hold 15.7 percent, while Caltagirone would control 6.6 percent. The Italian government, having recently reduced its ownership in Monte dei Paschi from 64 percent to 11.7 percent, would have a 4.8 percent stake in the new financial powerhouse, and reports suggest that they have not opposed the transaction.
This transaction has the potential to create substantial ripples in the financial sector. Caltagirone and Delfin collectively own 17 percent of the shares in the insurance firm Generali, and they are known to coordinate their actions. They have previously raised concerns regarding plans for a joint venture in asset management with French firm Natixis. Notably, the largest shareholder of Generali is Mediobanca, which holds a 13 percent stake. If MPS successfully acquires Mediobanca, it could lead to the formation of a significant new financial conglomerate that includes Monte dei Paschi, Mediobanca, and Generali.
Mediobanca has a strong focus on asset management and consumer credit and has been a pivotal player in Italy’s major economic transactions for decades. The bank has a reputation for profitability and is a leader in mergers and acquisitions (M&A) not only in Italy but also in France and Spain, with operations extending into Germany and Switzerland.
Since completing a capital increase in 2022, MPS has transformed its fortunes dramatically, with net profits soaring by 69 percent to reach 1.6 billion euros by the end of September 2024.
According to MPS, this acquisition would enable the bank to access tax credits (DTA) amounting to 2.9 billion euros over the next six years, with projected synergies from the merger estimated at 700 million euros and integration costs anticipated at 600 million euros.