Paschi Makes Surprise €13 Billion Share Offer for Mediobanca

Banca Monte dei Paschi di Siena SpA offered to acquire larger rival Mediobanca SpA in a €13.3 billion all-share deal, the latest unexpected twist in a series of takeover attempts involving Italy’s banking industry.

Monte Paschi is offering 23 new shares for every 10 in Mediobanca, according to a statement Friday that confirmed an earlier Bloomberg report. That values the bank at €15.992 a share, implying a 5% premium on Thursday’s close, Monte Paschi said in the statement.

Mediobanca rose as much as 3.8% in Milan trading Friday, while Monte Paschi slumped as much as 10%.

“We think the synergy potential is limited” between the two banks, KBW analyst Hugo Cruz said in a reaction note. “Our first impression is that this offer has limited chances of success.”

The surprise announcement adds to a whirlwind of proposed deals that has been sweeping across Italy over the past few months. The country’s third-biggest lender, Banco BPM SpA, offered to buy the domestic asset manager Anima Holding SpA in November, only to become a takeover target itself when UniCredit SpA launched a bid for it a few weeks later. 

The situation is complicated by a web of cross-holdings in some of Italy’s largest financial services firms by two billionaire clans, the Del Vecchios and Francesco Gaetano Caltagirone. The two families are major shareholders in Monte Paschi and Mediobanca. 

Mediobanca may opposed the bid and consider various countermoves, people familiar with the matter have said. The company is led by Chief Executive Officer Alberto Nagel, who has survived previous efforts to oust him by the Del Vecchios and Caltagirone.

A representative for Mediobanca declined to comment.

The Italian government plays a pivotal role, as it has been seeking to use the privatization of Monte Paschi as a way to create a domestic counterweight to the country’s two dominant banks, UniCredit and Intesa Sanpaolo SpA. Rome still holds about 11.7% in Monte Paschi after various placements over the past 18 months.

The proposed Mediobanca takeover would create a new bank “ranking among the top three institutions in terms of total assets,” Monte Paschi said in the statement on Friday. The Siena-based lender expects the transaction to deliver about €300 million in annual cost savings.

Shares of Monte Paschi have more than doubled over the past 12 months, giving it a market capitalization of roughly €8.8 billion as of Thursday. Shares of Mediobanca have risen 28% over the same period, for a market value of about €12.7 billion.

Delfin Sarl, the late billionaire Leonardo Del Vecchio’s family holding company, raised its stake in Monte Paschi to 9.8% earlier this month, giving it more influence to shape any deals involving the lender. It’s also the biggest shareholder in Mediobanca with 19.8%. 

Caltagirone owns 7.8% in Mediobanca and 5% in Monte Paschi.

The bid from Monte Paschi for Mediobanca was assisted by JPMorgan Chase & Co. and UBS Group AG, according to the statement.

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