Monte dei Paschi makes an offer of 13 billion euros for mediobanca

Italy is rescued Monte dei paschi di siena On Friday it launched a 13.3 billion euro ($13.95 billion) exchange-wide takeover bid for a larger domestic peer Mediobank.

Monte Dei Paschi (MPS) shares were down 7.97% as of 11:39 a.m.

By offering 23 of its shares for 10 of its acquisition target, Monte Dei Paschi values ​​Mediobanca shares at approximately 15,992 each, a 5% premium to the nearby January 23 price. The proposal must be approved at a shareholders meeting on April 17.

Monte Dei Paschi’s equity was worth €8.7 billion at the close of Jan. 23, while Mediobanca’s market capitalization stood at €12.3 billion, according to data data.

CNBC has contacted Mediobanca for comment.

Under the terms of the offer, Monte Dei Paschi estimates pre-tax profits of 700 million euros per year from the transaction, which would help it take advantage of tax credits from previous sustained losses and add 500 million per year for the next six years .

The lender, which intends to eliminate mediobanking, hopes to close the transaction by the end of September, Monte Dei Paschi CEO Luigi Lovaglio said in a briefing.

“Mediobanca is the best option at the best time for a powerful business combination,” he added. “We will take advantage of the excellence of the two brains, preserving their unique positioning. The new Italian champion will be resistant to (a) diversified commercial mix.”

In a note on Friday, KBW analysts Hugo Cruz and Ben Maher noted that the proposal has “limited” synergy potential and chances of success.

Monte Dei Paschi, the world’s oldest bank, required a state bailout in 2017 after years of crippling losses, but has turned the tides of its fortunes under the leadership of longtime Unicredit veteran Lovaglio. The Italian government retains an 11.73% stake in the lender, after reducing its position in a bid to reprivatize the lender.

Delfin, the holding company of the late billionaire Leonardo Del Vecchio, has increased its position to 9.78% since January, with business magnate Francesco Gaetano Caltagirone now holding 5.03%. Delfin and Caltagirone are Mediobanca’s largest shareholders, with 19.8% and 7.8%, respectively.

“The transaction could contribute to completing the dynamics of the Italian financial system, in the context of strong consolidation,” Italian Banking Union Fabi said after the offer was announced, according to a CNBC translation. “MPs, historically at the center of complex events, are now moving in an ambitious direction. The offer confirms, among other things, that MPs have fully recovered.”

In the midst of a useful environment of high interest, Monte Dei Paschi was able to offer its First dividend in 13 yearsPost a CET1 ratio, a measure of a bank’s strength and resilience, of 18.3% in the third quarter.

Friday’s offering adds to a picture of heating up M&A appetite in Italy’s banking and financial services sector, where the country’s second-largest bank, Unicredit, previously offered to buy. BPM BANKwhich in turn seeks to acquire the fund manager Anima Holding. Monte Dei Paschi was itself a potential acquisition target for Unicredit until talks collapsed recently in 2021.

– CNBC’s Silvia Amaro and Ganesh Rao contributed to this report.