

Italy’s bailed-out Monte dei Paschi di Siena recently launched a 13.3 billion euro ($13.95 billion) all-share takeover bid for its larger domestic peer, Mediobanca. This move has stirred various reactions, as Monte dei Paschi’s shares tumbled while Mediobanca’s surged. By offering 23 shares for every 10 of Mediobanca, Monte dei Paschi valued its counterpart’s stock at around €15.992 each, representing a 5% premium from the previous day’s closing price. The proposal is set for scrutiny at a shareholder meeting scheduled for April 17. According to FactSet data, Monte dei Paschi’s equity was valued at 8.7 billion euros on January 23, while Mediobanca’s market capitalization reached 12.3 billion euros.
The deal, if greenlit, could generate pre-tax benefits of 700 million euros annually for Monte dei Paschi, giving it the opportunity to utilize tax credits from prior losses and rake in an extra 500 million euros per year over the next six years. Monte dei Paschi intends to take Mediobanca off the public market and is eyeing a successful conclusion of the takeover by September year-end, as disclosed by CEO Luigi Lovaglio during a recent briefing. Lovaglio expressed confidence in the merger, describing Mediobanca as the ideal partner for the current market dynamics, asserting that it will enhance both entities’ strengths while preserving their distinct market positions. In his vision, this collaboration will birth a resilient Italian powerhouse with a diversified business portfolio.
On the flip side, analysts from KBW, Hugo Cruz, and Ben Maher, cast doubt on the potential success and synergy prospects of the proposed merger. Despite the ambitious pre-tax benefits forecasted by Monte dei Paschi, KBW’s analysts perceive limited synergies in the union between the two Italian banking giants. The roadmap for the deal remains uncertain, as shareholder approval looms large over the forthcoming meeting in April. With contrasting perspectives on the likely outcome, market observers are closely monitoring the developments surrounding this high-stakes acquisition bid between Monte dei Paschi and Mediobanca.