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Italy was saved Monte dei Paschi di Siena On Friday, it launched a 13.3 billion euro ($13.95 billion) all-stock takeover offer for a major domestic peer. Mediobanca.
Monte dei Paschi (MPS) shares ended 6.74% lower, while Mediobanca rose 2%.
Monte dei Paschi is offering 23 of its own shares in exchange for 10 target shares, valuing Mediobanca shares at approximately 15.992 euros per share, a 5% increase on the January 23 closing price. The amount will be the premium added. The proposal must be approved at the shareholders’ meeting in April. 17.
Monte dei Paschi’s shares were worth 8.7 billion euros at the close on Jan. 23, compared with Mediobanca’s market capitalization of 12.3 billion euros, according to FactSet data.
CNBC has reached out to Mediobanca for comment.
Under the terms of the acquisition, Monte dei Paschi estimates that the transaction will generate an annual pre-tax profit of €700 million, which will take advantage of tax credits from past recurring losses and generate an annual return of €700 million over the next six years. An additional 500 million euros will be added.
Monte dei Paschi CEO Luigi Rovaglio said in a press conference that the lenders seeking to delist Mediobanca hope to complete the transaction by the end of September.
“Mediobanca is the right fit at the right time for a strong business combination,” he added. “We will leverage the brilliance of our two minds and maintain our unique positioning. The new Italian champion will also be able to respond to a diverse business mix.”
KBW analysts Hugo Cruz and Ben Maher said in a note Friday that the proposal “limits” the potential for synergies and the likelihood of success.
Monte dei Paschi, the world’s oldest bank, required a state bailout in 2017 after years of devastating losses, but has turned its fortunes around under the leadership of UniCredit veteran Lovaglio. I let it happen. The Italian government still holds an 11.73% stake in the lender after reducing its position in an effort to re-privatize the lender.
Delfin, the holding company of the late billionaire Leonardo Del Vecchio, has increased its stake to 9.78% since January, while businessman Francesco Gaetano Caltagirone now owns 5.03%. Delfin and Caltagirone are Mediobanca’s largest shareholders, holding 19.8% and 7.8% respectively.
“This transaction could contribute to completing the dynamics of the Italian financial system against the background of strong integration,” Fabi, head of the Italian banking union, said after announcing the deal, according to a translation by CNBC. . “MPS, which has been at the center of historically complex events, is now moving in an ambitious direction. This bid, among other things, confirms that MPS has made a full recovery.”
A favorable high interest rate environment enabled Monte dei Paschi to pay its first dividend in 13 years last year, and the CET1 ratio, a measure of a bank’s strength and resilience, recorded 18.3% in the third quarter. did.
Friday’s offer adds to a growing appetite for M&A in Italy’s banking and financial services sector, which UniCredit, Italy’s second-largest bank, had previously offered to acquire. Banco BPMnow aiming to acquire fund manager Anima Holding. Monte dei Paschi itself was a potential takeover target for UniCredit until negotiations broke down in 2021.
—CNBC’s Silvia Amaro and Ganesh Rao contributed to this report.
