Monte dei Paschi di Siena (MPS) has made a surprising move by launching a €13.3 billion ($13.9 billion) all-share takeover offer for larger rival Mediobanca, signaling a new phase of consolidation in Italy’s banking sector.
The offer, made on Friday, proposes an exchange of 23 Monte dei Paschi shares for every 10 Mediobanca shares, valuing Mediobanca’s stock at approximately €15.99 each—a 5% premium over the stock’s closing price on January 23.
While the deal is a bold step in the restructuring of Monte dei Paschi, a bank that required a state rescue in 2017 due to years of financial turmoil, it has faced a mixed reaction in the market. Shares of Monte dei Paschi fell by nearly 8% shortly after the announcement, while Mediobanca’s shares rose by over 6%.
Monte dei Paschi’s decision to pursue the acquisition reflects a broader trend of increasing mergers and acquisitions (M&A) activity within Italy’s financial sector. The bank, led by CEO Luigi Lovaglio, who has previously overseen significant changes in the lender’s operations, aims to use the deal to drive profitability through an expected €700 million in annual pre-tax synergies. The bank also anticipates additional benefits of €500 million per year from tax credits linked to its previous losses.
Mediobanca, which specializes in investment banking, wealth management, and consumer finance, has a market capitalization of €12.3 billion, surpassing Monte dei Paschi’s valuation of €8.7 billion as of January 23. While Monte dei Paschi views the acquisition as a strategic move to bolster its position in the market, analysts have expressed skepticism about the potential for meaningful synergies between the two institutions. KBW analysts have labeled the offer as having “limited” synergy potential and questioned its chances of success.
The deal would also need to be approved at a shareholder meeting scheduled for April 17, with a finalization expected by the end of September. Monte dei Paschi’s shareholders, including the Italian government (which retains an 11.73% stake in the bank), may have differing views on the offer, especially given the complex web of ownership stakes in both Monte dei Paschi and Mediobanca.
Notably, Delfin, the holding company controlled by the late billionaire Leonardo Del Vecchio’s family, and businessman Francesco Gaetano Caltagirone are major shareholders in both banks, further complicating the situation. Delfin, which has significantly increased its stake in Monte dei Paschi, holds a significant position in Mediobanca as well, alongside Caltagirone, who is also a key investor in both banks.
Despite the challenges and uncertainties surrounding the offer, the Italian banking union Fabi has expressed support for the proposal, viewing it as a step towards strengthening the country’s financial system. This move comes amid broader efforts to re-privatize Monte dei Paschi, which had previously been a potential target for a takeover by UniCredit. However, negotiations between the two banks collapsed in 2021.
