Monte dei Paschi investors back hostile bid for Mediobanca

By Valentina Za

SIENA, Italy (Reuters) -Shareholders in Monte dei Paschi di Siena on Thursday backed a 12.5 billion euro ($14 billion) takeover offer for Mediobanca, clearing a first hurdle for the hostile bid targeting a prestigious name in Italian finance.

Normally rare in banking, hostile bids are rocking Italy. Italian lenders completed a deep restructuring in time to ride higher interest rates and have booked record profits in recent years. They are now bracing for slowing revenue by bulking up.

"We're in an intense phase of consolidation. We decided to make a move because we didn't think it'd be a good idea to just sit tight and wait," MPS CEO Luigi Lovaglio told shareholders.

"We are deeply convinced that size matters ... and this is a good combination."

MPS shareholders representing 86.5% of capital attending Thursday's meeting approved the share issue needed to finance the bid.

The ball is now in the court of Mediobanca's shareholders who in the coming months will need to decide whether to tender their shares.

Mediobanca has rejected the approach, saying it would destroy value for its shareholders.

For MPS, the surprise bid unveiled in January marks the culmination of the restructuring the bailed-out Tuscan bank completed under Lovaglio, at the helm since 2022.

Italy acquired 68% of MPS in 2017 as part of an 8 billion euro bailout that became necessary after the bank burnt through 17 billion euros in fresh capital during the previous decade.

Plagued by political interference, MPS was brought to its knees by a disastrous acquisition on the eve of the global financial crisis.

The bank returned to pay a dividend out of 2023 profits for the first time in 13 years, after using the bailout money to shed a mountain of bad debts, and cash from its latest new share issue in 2022 to lay off a quarter of its staff to cut costs.

CORE INVESTORS

Starting in November 2023 Italy has cut its stake to the current 11.7% through three stake placements it carried out at increasingly higher prices, raising a total of 2.7 billion euros.

It completed the last one in November 2024, selling 15% of MPS at a premium versus market prices and bringing onboard a core of Italian shareholders who played a key role in supporting the bid.

MPS said on Thursday that Francesco Gaetano Caltagirone, an Italian construction tycoon, had raised his stake to 9.96%.

Caltagirone had become an investor last November alongside Delfin, the investment vehicle of the heirs of late Italian billionaire Leonardo Del Vecchio.

Delfin had also raised its stake in MPS to 9.86% in recent months. Caltagirone and Delfin own also 27% of Mediobanca and 17% of insurer Generali.

As Generali shareholders they have clashed with Mediobanca, which is the main investor in the insurer. In rejecting MPS' offer Mediobanca has complained about their cross-shareholdings.

Supporters of the proposal on Thursday include other Italian institutional investors such as pension funds, as well as bank Banco BPM and fund manager Anima Holding.

Anima partners with both MPS and Banco BPM, and it has just been taken over by the latter. Banco BPM was the Treasury's preferred choice as a partner for MPS, but that plan was derailed by UniCredit CEO Andrea Orcel.

Shortly after the Treasury stake placement, Orcel swooped on BPM, leaving Lovaglio with few alternatives in the way of merger partners.

A 'yes' vote came also from some international investors such as Norway's sovereign wealth fund and Pimco. ($1 = 0.8787 euros)

(Reporting by Valentina ZaEditing by Keith Weir)