By Gianluca Semeraro
MILAN (Reuters) -Italian bank Mediobanca on Tuesday rejected a takeover offer by state-backed rival Monte dei Paschi di Siena, saying a tie-up would be detrimental to its shareholders because it lacked any strategic and financial rationale.
Monte dei Paschi’s (MPS) bid is the latest in a series of Italian banking tussles that are reshaping the country’s financial landscape as lenders brace for tougher times ahead, after higher interest rates fuelled record profits.
MPS on Friday announced a 13.3 billion euro ($13.9 billion) buyout bid for Mediobanca, surprising investors, who voted down a move that would turn the bailed-out Tuscan bank from a takeover target into the buyer of a revered name in Italian finance.
MPS shares were down 2.2% by 1418 GMT, having fallen 2% on Monday and 7% on Friday. Based on the proposed exchange ratio, that indicates a value of 14.31 euros for each Mediobanca share, which on Tuesday traded instead at 15.92 euros, down 3.5%.
Under CEO Alberto Nagel, Mediobanca has bet on consumer finance and, more recently, wealth management to complement its investment banking operations, while leaving behind its role of kingpin of Italian capitalism.
Mediobanca said in a statement the offer would weaken its business model by drawing clients and bankers away from its investment banking and wealth management businesses.
A retail bank rescued by the state in 2017, MPS already partners in consumer finance with Mediobanca, which reaps more than a third of its income from its stake in insurer Generali.
Mediobanca complained about a web of crossholdings surrounding the bid.
In November, when it cuts its stake to 11.7%, Italy brought onboard as MPS shareholders construction magnate Francesco Gaetano Caltagirone and Delfin, the holding company of late Luxottica founder Leonardo Del Vecchio.
Caltagirone and Delfin together own 27% of Mediobanca, 15% of MPS and 17% of Generali. Mediobanca said Delfin representatives on its board had abstained on Tuesday.
The board, which will give its formal advice to shareholders only once the bid’s prospectus is public in a few months’ time, also said the tie-up would hurt Mediobanca’s prospective earnings, given that falling interest rates are set to weigh more on MPS.
The rejection was expected after CEO Nagel said in a letter to employees at the weekend the offer had not been previously agreed and the bank would decide how to best protect the interests of its stakeholders.
MPS has returned to profit and dividends after receiving more than 10.5 billion euros in fresh cash between 2017 and 2022, which it has used to clean up its balance sheet and lay off thousands of staff to slash costs.
Favourable court rulings have also allowed it to release money set aside against legal risks.
The deal has the blessing of the Italian government, which wants to see a third strong banking force emerge to compete with Intesa Sanpaolo and UniCredit.
Prime Minister Giorgia Meloni said at the weekend the deal, if successful, would create such a player and also help to place Italians’ savings in safe hands.
Italy’s conservative government has expressed reservations towards Generali’s proposed tie-up with Natixis Investment Managers to create a European asset management champion.
($1 = 0.9528 euros)
(Writing by Valentina Za and Keith Weir; Editing by Emelia Sithole-Matarise and Jan Harvey)
