MPS prepares twin bids for Banco BPM and Banca Generali in Intesa defense - FT

Monte dei Paschi di Siena (MPS) is preparing two all-share takeover bids for Banco Bpm SpA and Banca Generali as it seeks to prevent an unsolicited acquisition by Intesa Sanpaolo, according to the Financial Times. A majority of MPS's board has endorsed this plan, which aims to create a larger financial group with a combined market capitalization of around €70 billion.

MPS would launch separate bids for Banca Generali, valued at nearly €8 billion, and Banco BPM, which has a market value of just over €25 billion. The plan also includes a potential cash dividend to bolster support among existing MPS shareholders. This dual intervention represents a significant step in Italian banking consolidation, following Intesa Sanpaolo's €36 billion unsolicited tender offer for MPS in June.

Should Intesa succeed, it plans to dismantle MPS by transferring key infrastructure to insurer Unipol and absorbing MPS's stake in Mediobanca. MPS CEO Luigi Lovaglio faces challenges in executing the simultaneous transactions due to board and shareholder fragmentation. Prior merger talks with Banco BPM fell through last month due to Crédit Agricole's refusal to back the informal merger of equals.

The current proposal lacks buy-in from Crédit Agricole and Banca Generali, whose participation is crucial for the deal's structure. Generali's participation would require scrutiny from independent directors under related-party transaction rules. Despite the risks, Lovaglio's move aligns with Rome's goal of creating a strong third domestic banking competitor to Intesa and UniCredit.

The Italian government, which initiated privatization efforts two years ago following MPS's 2017 state rescue, still holds a minority stake amid the ongoing consolidation saga.