Mps Launches Full Takeover Bid for Mediobanca: What Happens Now and the Opportunities for Italy


The Italian banking system is facing an event of historic significance: Banca Monte dei Paschi di Siena (MPS) has officially announced the launch of avoluntary totalitarian Public Exchange Offer (OPS) on Mediobanca shares. This transaction, if completed, could redefine the value of MPS shares and the credit landscape in Italy, creating a new banking pole of national and potentially European significance.

WHAT HAPPENED: THE ANNOUNCEMENT OF THE OPS

  • The nature of the operation. The offer is voluntary, i.e. it aims at obtaining 100% of Mediobanca shares. MPS proposes a paper-for-paper exchange, offering new MPS shares in exchange for the shareholders’ Mediobanca shares, at a ratio of 2.300 MPS shares for each Mediobanca share.
  • The implied value and premium. Based on the closing price of MPS shares on 23 January 2025, the offer values each Mediobanca share at around EUR 15.992, a premium of more than 5 per cent to the last quoted price (around EUR 15). If the offer is accepted in full, the value of the MPS shares issued would exceed 13 billion euro.
  • Objective: the MediobancaMPS Delistingaims to obtain at least 66.67% of the capital to consolidate the industrial project and, if possible, exceed 90% (or 95%) to proceed with the delisting of Mediobanca shares from Piazza Affari, using the legal instruments of the Sell Out Procedure and the Squeeze Out Right.

REGULATORY STEPS AND AUTHORISATIONS

A transaction of this magnitude requires a well-defined regulatory path:

  1. Filing of the Offer Document with Consob
    • The announcement is only the beginning. MPS must now submit to Consob the Offer Document, which details the transaction, the consideration, the conditions of effectiveness and the expected impacts. Once approved, the Acceptance Period will open.
  2. ECB, Bank of Italy, IVASS and Antitrust authorisations
    • The ECB and the Bank of Italy must authorise the acquisition of control in Mediobanca, verifying compatibility with sound financial management.
    • IVASS will assess the indirect acquisition of Assicurazioni Generali, in which Mediobanca has a significant stake.
    • The European Commission or the AGCM will assess the impact on competition, in particular on the market for Mediobancashares and MPS shares.
  3. Extraordinary shareholders’ meeting of MPS
    • MPS will require a capital increase ‘in kind’ to issue new MPS shares, subject to approval by the extraordinary shareholders’ meeting.
  4. Golden Power checks
    • The Italian government could use special powers to protect national strategic interests, given Mediobanca’s position in the financial system.

POSSIBLE SCENARIOS FROM NOW ON

a) Exceeding the 66.67% threshold

  • Consolidation of the transaction. With a two-thirds quorum, MPS will be able to integrate Mediobanca, potentially increasing the value of MPS shares.
  • Towards 90-95% and DelistingMore than 90% of the capital allows Mediobanca to be delisted, forcing minority shareholders to sell their Mediobanca shares.

b) Reaching of subscriptions of less than 66.67%.

  • Possible failure to complete. Without a quorum, the OPS might not materialise or be withdrawn, negatively affecting the MPS share price.
  • Mediobanca still listed. With a significant shareholding but less than 66.67%, Mediobanca could remain listed, keeping Mediobanca shares on the stock market.

c) The reactions of Mediobanca’s major shareholders

  • Delfin, Caltagirone, Institutional Funds. Key shareholders of Mediobanca will play a decisive role on Mediobanca shares.
  • Possible ‘countermoves’. Mediobanca’s Board of Directors could negotiate or reject the offer, potentially leading to counterproposals impacting MPS shares.

WHY THE TRANSACTION COULD BE ADVANTAGEOUS FOR ITALY

  1. Creation of a ‘national champion
    • A banking group with the combined specialisations of MPS and Mediobanca could better compete at European level.
  2. Utilisation of MPS’s DTAs
    • The merger could accelerate the recovery of MPS’s deferred tax assets, improving capitalisation.
  3. Cost and revenue synergies
    • Expected synergies of EUR 0.7 billion per year, increasing efficiency and profitability.
  4. Stability of the banking system
    • A large player reduces systemic risks and can offer more stable credit conditions.
  5. Supporting the industrial fabric
    • Potential improvement in access to finance for Italian SMEs.

CRITICISMS AND OPEN QUESTIONS

  1. Market concentration
  2. Reduced competition could adversely affect consumers.
  3. The role of the MEF
    • The presence of the state in MPS raises questions about the governance of the new group.
  4. Operational integration
    • Merging two different business models takes time and resources.
  5. Effects on Generali
    • Mediobanca’s stake in Generali could alter insurance governance.

NEXT STEPS AND HOW TO FOLLOW THE OPERATION

  • Publication of the Offer Document: after Consob approval.
  • MPS Shareholders’ Meeting for the capital increase: crucial for the issue of the new shares.
  • Subscription period: monitoring of subscriptions to reach critical thresholds.
  • Regulatory authorisations: necessary to proceed with the operation.

WHY IT COULD BE A STEP FORWARD FOR ITALY

  1. Robustness of the banking system: a large integrated group would be better able to face global challenges.
  2. Support for economic growth: better banking services for households and businesses.
  3. Efficiency and innovation: synergies to reinvest in technology and new services.
  4. European competitiveness: an Italian operator could play a more significant role in Europe.

MPS’s OPS on Mediobanca is an opportunity to consolidate the Italian banking sector, but it also carries significant risks. The key will be the management of the transaction, collaboration between the parties, and regulatory approval. If well managed, it could position Italy with a new player in the international financial landscape, with potential benefits for the value of Mediobanca and MPS shares.

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