Mediobanca Reiterates Opposition to Monte Paschi Takeover Bid
The bank said a combination between the two lenders would be 'unnatural, and highly value-destructive,' according to a statement issued after a board meeting Friday. The board of directors also reiterated that Monte Paschi offer is 'not fair'.
The deal is part of a series of competing bids that are reshaping the finance landscape in Italy. Monte Paschi, which was bailed out and nationalized before returning to private ownership, stunned investors earlier this year with an all-share offer to acquire the larger rival.
Mediobanca Chief Executive Officer Alberto Nagel already dismissed a potential deal as lacking industrial and financial rationale and destructive. Monte Paschi CEO Luigi Lovaglio is instead of the opinion that his bank would benefit from the combining efforts in asset gathering, private banking, investment banking and insurance.
Mediobanca said Friday that a merger would results in about €460 million of lost synergies.
One of Mediobanca's main objections relates to the value. Monte Paschi is offering 25.33 new shares for every 10 in Mediobanca, valuing the target at around €14.6 billion ($17 billion), below Mediobanca's market capitalization of around €15.2 billion. The valuation is suggesting investors expect the bid to be raised. The offer carried a premium of about 5% when it was first unveiled.
Still, the deal has political backing as the government in Rome, which still owns a stake in Monte Paschi, would like to build a third large banking group around the Tuscan lender, able to compete with Intesa Sanpaolo SpA and UniCredit SpA.
Monte Paschi has said it wants to get at least two thirds of Mediobanca's shares, though it may still decide to waive that condition and accept a commitment of at least 35%.
Both lenders are part of a complicated web of dealmaking in Italian finance, where cross-holdings, alliances and sometimes conflicting interests mean that developments in one deal have repercussions for others.
Monte Paschi's plan is also backed by the billionaire Del Vecchio family and construction tycoon Francesco Gaetano Caltagirone, the two largest investors in Mediobanca.
The presence of the same shareholders – namely Del Vecchio' Delfin and Caltagirone – in Paschi, Mediobanca and Assicurazioni Generali SpA 'constitutes a potential misalignment of the interests of these shareholders with those of the rest of the shareholding structure,' Mediobanca said Friday.
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