Mediobanca prepares defense after Paschi’s unsolicited bid

(Bloomberg) — A takeover attempt by smaller rival Banca Monte dei Paschi di Siena SpA was unsolicited, Mediobanca SpA’s chief executive said, as the Italian investment bank prepares to respond and potentially defend itself.

Chief executive Alberto Nagel said in a letter: “The offer has not yet been agreed and the board will meet in the coming days to review it and express its assessment in order to protect all interests. stakeholder interests,” staff seen by Bloomberg.

The bank’s board will meet on Tuesday to review the unexpected takeover bid, people familiar with the matter said. The all-stock acquisition values ​​Mediobanca at about 12.4 billion euros ($13 billion), based on Friday’s closing prices. The potential defense was further complicated by the Italian government’s support for the deal with Monte Paschi, which remains partly owned by the state.

Nagel said in the letter that Mediobanca will now position itself following the bid. The ANSA news agency earlier reported the letter. The Milan-based bank viewed the proposal as hostile, a person familiar with the matter told Bloomberg on condition of anonymity.

A representative for Mediobanca declined to comment on the letter or the board meeting.

Monte Paschi shares fell 2.4% at 9:17 a.m. in Milan trading, extending Friday’s 6.9% drop. Mediobanca fell 0.2%.

Monte Paschi’s shocking move reflects the company’s rapid turnaround in recent years under Chief Executive Luigi Lovaglio, which was privatized after receiving a government bailout in 2009. It also signals Italy’s interest in creating the country’s third major bank in a series of deals in recent months.

Prime Minister Giorgia Meloni said on Saturday that Paschi was now “fully recovered” and able to take ambitious steps such as acquiring Mediobanca.

“If this deal comes to fruition, obviously we will evaluate the birth of the third pole that we have been talking about for a long time,” Meloni said.

Last year, Italy became the center of European banking consolidation following UniCredit SpA’s unpopular takeover of Commerzbank AG, followed by an unsolicited takeover of Banco BPM SpA.

However, analysts have so far been skeptical of Pasky’s move. KBW’s Hugo Cruz said in a reaction note that at first glance, the deal had “limited chances of success.” The offer represents a 5% premium to Mediobanca’s share price before the deal was announced, a buffer that disappeared as Paschi’s shares fell 6.9% to 6.49 euros in Milan on Friday, while Mediobanca’s shares rose 7.7%.

The acquisition will allow it to increase its wealth management business and cut annual costs by 300 million euros, Paschi said in a statement on Friday.

(Updated values ​​as of Friday in third paragraph, shared reactions in sixth paragraph.)

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