By Andrea Mandala and Claudia Cristoferi
MILAN (Reuters) -Italian lender Monte dei Paschi di Siena (MPS) raised its bid for Mediobanca by adding a 750-million-euro ($878 million) cash component to its all-share proposal, in a move aimed at gaining full control of the merchant bank.
State-backed MPS surprised investors in January by launching a bid for the larger Milan-based rival, amid a consolidation wave sweeping Italian banking.
A takeover of Mediobanca, a former lynchpin of Italian capitalism now active in wealth management, by MPS has the blessing of Italy’s government which believes the combination will create a strong rival to market leaders Intesa Sanpaolo and UniCredit.
The Mediobanca board will meet on Thursday to assess the improved bid, a source close to the situation said. Mediobanca has repeatedly opposed the MPS takeover offer, describing the price as “totally inadequate”.
MPS is now offering an additional cash consideration of 0.90 euros for each Mediobanca share, as well as 2.533 of its own shares, it said in a statement.
The decision lifts the value of the offer to around 16.6 billion euros if the current trading price of around 7.7 euros per MPS share is considered, according to Reuters calculations.
Mediobanca shares, trading at 20.3 euros at 1445 GMT, broadly priced in the new value of the bid, after previously having remained above the initial MPS offer.
A Milan-based trader told Reuters that the new bid was an expected move and that the success of the deal is already taken for granted by the market.
GUIDANCE CONFIRMED
The MPS board said the sweetened bid provided “further and concrete evidence of the industrial value of the transaction”.
MPS, based in Tuscany, added it was confirming its financial goals. A successful bid for Mediobanca would cap a remarkable turnaround for the bank, regarded as the world’s oldest lender, which required a state bailout in 2017.
MPS also waived the two-thirds threshold condition for its bid on Mediobanca. The shareholder take-up stood at just above 30% as of September 2. The offer runs to September 8.
In July, MPS said that securing at least 35% of Mediobanca’s shares would give it “de facto” control.
However, acquiring two-thirds of its target’s capital would ensure full control and accelerate its ambitious plan to combine its commercial banking operations with Mediobanca’s investment banking and wealth management businesses.
The decision to sweeten the bid will increase the take-up by shareholders, giving MPS two key advantages, said Jérôme Legras, Head of Research, Axiom Alternative Investments.
“The consolidation of Mediobanca would increase MPS’ profitability, allowing it to utilize its significant amount of deferred tax assets (DTAs)…,” Legras wrote in a comment.
He added that a full take-up of the offer would mean a much reduced impact on the CET1 capital ratio for MPS.
($1 = 0.8542 euros)
(Reporting by Andrea Mandalà, Claudia Cristoferi and Gianluca Semeraro, writing by Giulia Segreti and Keith Weir, editing by Ros Russell and Gavin Jones)
