New round in the banking consolidation game. Intesa Sanpaolo, together with Unipol, a move that will also have repercussions for its investee Bper, on Monday launched a public purchase and exchange offer (OPAS) worth 30.6 billion euros for the entire share capital of the Monte dei Paschi di Siena (MPS) banking group, in which the Italian state still holds a small stake through the Economy Ministry.
Unipol will propose to Bper, of which it is the main shareholder, a merger with the Siena branches, from which a post-merger group would be created under the name Banca Monte dei Paschi. To support the deal, a capital increase at Unipol Assicurazioni of up to 2.5 billion euros is planned.
If the transaction goes through, Intesa Sanpaolo would become the second-largest banking group in Europe by stock market value, in yet another shake-up of the Italian and European banking landscape.
MPS completed in December the acquisition of Mediobanca, which controls part of insurance giant Generali, after months of bids and negotiations that again involved BPM and UniCredit, and also sparked an exchange between the Italian government and the European Commission.
What is BPM’s competing offer?
With this move Intesa and Unipol upend the plans of Banco BPM, which on Sunday submitted to MPS a friendly proposal for a merger of equals.
The aim of Banco BPM’s proposal – and therefore also of French group Crédit Agricole, which holds 20.1% – is to create a major banking group capable of breaking the current de facto duopoly on the Italian market, made up of Intesa Sanpaolo and UniCredit.
“The chances of success for a suitor who thinks he can win over his beloved simply by sending her a letter are slim,” commented Unipol chairman Carlo Cimbri, referring to BPM’s intentions during the press conference in Milan presenting the strategic project with Intesa Sanpaolo on MPS.
For the Milan-based bank it will in any case be harder to pursue this strategy, since Intesa’s OPAS blocks transactions and alternative offers on Monte dei Paschi under the so-called passivity rule, which bans them for the duration of the offer, which must be completed by December 2026.
The merger to become Europe’s second-largest banking group
According to a reconstruction by Corriere della Sera (source in Italian), on 10 September Intesa Sanpaolo will call an extraordinary shareholders’ meeting to vote on a 5.7-billion-euro capital increase for the issue of ordinary shares backing the transaction, which envisages Intesa taking over the legal entity of MPS, Mediobanca and its businesses.
Unipol will thus acquire 635 Monte dei Paschi branches, 55 billion euros in direct funding, loans to customers of around 42 billion, with profit of between 400 million and 460 million, and brings with it risk-weighted assets of up to 20 billion, the MPS brand and around 2 million customers.
At this point in the plan Bper will come into play, with Unipol proposing a combination with the “new” MPS and a change of name of the new entity to Banca Monte dei Paschi.
To carry out the transaction, Unipol will submit to an as yet unscheduled extraordinary general meeting a proposal to authorise the board of directors to increase the share capital by up to 2.5 billion euros.
The merger is expected to be completed in December and, according to the plans, will allow the new banking group to further strengthen its “support for the real and social economy as a European leader”.