Monte dei Paschi Shares Slide as Mediobanca Considers Takeover Bid
Shares of Monte dei Paschi (MPS) continued their decline on Tuesday amidst a meeting by the board of Mediobanca to discuss the smaller rival's unexpected bid. The move adds to a series of takeover attempts shaking the Italian banking sector.
On Friday, MPS announced a €13.3 billion ($13.9 billion) buyout offer for Mediobanca. However, the value of the all-share bid has dropped due to investor skepticism about the proposed merger.
By 0820 GMT, MPS shares had fallen 1.6%, extending losses from 2% on Monday and 7% on Friday. Based on the proposed exchange ratio, the offer equates to €14.735 per Mediobanca share, which traded at €16.435 on Tuesday.
Under Italian regulations, the Mediobanca board can only provide formal guidance once the bid prospectus is publicly released in the coming months. However, the board is widely expected to express its opposition to a bid from a smaller rival that required state intervention to avoid collapse in 2017.
In a message to employees over the weekend, Mediobanca CEO Alberto Nagel stated that the offer had not been previously discussed, and the bank would determine the best course of action to protect stakeholder interests.
MPS has recovered profitability and resumed dividend payments after receiving over €10.5 billion in fresh capital between 2017 and 2022. This capital has been used to strengthen the balance sheet and reduce operating costs through staff layoffs. Favorable court rulings have also released provisions for legal risks.
The deal has the support of the Italian government, which aims to create a third major banking player alongside Intesa Sanpaolo and UniCredit. A share placement by the state in November brought in Francesco Gaetano Caltagirone and the holding company of the late Leonardo Del Vecchio as MPS shareholders.
These investors also hold significant stakes in Mediobanca and Generali, Italy's largest insurer and a major holder of domestic government bonds.