By Valentina Za

MILAN (Reuters) - Bailed-out lender Monte dei Paschi di Siena (MPS) launched on Friday a 13.3 billion euro ($13.9 billion) all-share buyout offer for Mediobanca, in the latest surprise twist of a complex Italian banking saga.

Monte dei Paschi (MPS), which for years was the problem child of Italian banking until a 2017 state rescue, is offering 23 of its own shares for every 10 Mediobanca shares tendered, equivalent to a 5% premium versus Thursday's closing price.

Mediobanca, whose business is geared towards investment banking, wealth management and consumer finance, has a market value of 12.7 billion euros.

MPS has reached a capitalisation of 8.8 billion euros, with its share more than tripling in value since November 2022 when CEO Luigi Lovaglio pulled off a make-or-break cash call to fund thousands of staff layoffs and drive profits through cost cuts.

The tie-up would offer a commercial network to Mediobanca, which was known as an M&A boutique and lender to Italy's biggest companies before switching to wealth management under CEO Alberto Nagel.

MPS, which aims at delisting Mediobanca's shares from the Milan bourse, estimated pre-tax benefits of 700 million euros a year from the tie-up. It would allow MPS to use tax credits from past losses, adding 500 million euros a year for six years to its profit.

The finalisation of the exchange deal is expected by end-September.

The buyout offer comes after Italy's drive to re-privatise the Tuscan bank brought onboard as shareholders in November Delfin, the holding company of late billionaire Leonardo Del Vecchio, and fellow tycoon Francesco Gaetano Caltagirone.

Delfin is the biggest shareholder in Mediobanca with a 19.8% stake while Caltagirone owns 7.8%.

Delfin nearly tripled its initial MPS holding to 9.8% in January.

Mediobanca, Caltagirone and Delfin are all large shareholders in insurer Generali, accounting for almost a third of its capital base. MPS currently partners in insurance with AXA, with a contract that runs out in 2027.

Caltagirone, who had initially bought 3.5% of Monte dei Paschi, increased the stake to 5% in November.

Italy, as it gradually reduced its stake to 11.7% from the initial 68%, has been seeking a partner for MPS, which like other mid-sized banks faces long-term challenges due to the need for hefty technology investments and the threat from non-bank players.

Since UniCredit walked away from a deal back in 2021, the Treasury has been working on a potential tie-up with Banco BPM, which became a shareholder in MPS alongside Delfin and Caltagirone in November.

Story Continues

That plan was derailed by UniCredit's decision late last year to launch a buyout offer for Banco BPM, as CEO Andrea Orcel said his bank could not afford to be sidelined in the consolidation process.

($1 = 0.9568 euros)

(Reporting by Valentina Za in Milan and Gursimran Kaur in Bengaluru, editing by Gavin Jones)

View Comments