Monte dei Paschi bids $40 billion for BPM, Banca Generali to fend off Intesa

By Valentina Za, Andrea Mandala and Giulio Piovaccari

MILAN, Aug 21 (Reuters) - Italy's Monte dei Paschi di Siena launched separate all-share bids totalling about €34 billion ($40 billion) for Banco BPM and Banca Generali on Friday, in an attempt to repel a hostile takeover by Intesa Sanpaolo.

MPS CEO Luigi Lovaglio is seeking to keep the historic bank independent and forge Italy's third-largest lender with the bids, rather than accept Intesa's €36 billion cash-and-share offer, which has raised competition concerns in Rome.

Lovaglio said MPS was the "natural partner for a friendly aggregation", adding that the proposed combination would rank among Europe's top 10 banks. Both Banco BPM and Banca Generali declined to comment on the MPS bids. 

MPS also proposed giving its shareholders an extraordinary distribution worth €4 billion, made up of €1 billion in cash and the remainder in Generali shares owned by the bank.

This would represent around 4.5% of Italian insurer Generali, in which MPS holds a 13.3% stake through investment bank Mediobanca, which it acquired last year. 

Intesa is offering MPS investors €3 billion in cash as part of its takeover bid.

ANNOUNCEMENT FAILS TO IMPRESS INVESTORS

The announcement failed to impress investors, however, and Banco BPM and Banca Generali shares were down 0.5% and 2.6% respectively by 1145 GMT, while MPS slipped 0.8%.

MPS had already explored a potential deal with Banco BPM to thwart Intesa's takeover, but the two banks ended talks last month after BPM's main investor, France's Credit Agricole, expressed its disapproval of the plan.

Credit Agricole and Generali, which controls Banca Generali, declined to comment on Friday.     

Analysts at research firm Third Bridge said the MPS plan made strategic sense but its timing made it "a purely defensive move" against Intesa's approach.

The proposed deals aligned with Rome's long-term goal of creating a third national bank to take on Intesa and UniCredit, they said, but raised questions about whether MPS could "realistically integrate multiple banks at the same time".

SHAREHOLDER VOTE IN OCTOBER 

"Our destination is clear to create a stronger, more diversified, more resilient institution," Lovaglio said of the plan, which was approved by a majority of MPS directors but faces dissent from others.

Under Italian takeover rules, at least two-thirds of MPS shareholders, including Delfin, the vehicle of the Del Vecchio eyewear dynasty, and businessman Francesco Gaetano Caltagirone, will have to clear the plan in a vote scheduled for October 29. 

The twin deals would generate estimated annual pre-tax synergies of around €2.6 billion, said MPS, which is targeting a deal completion date of mid-February 2027.

MPS, which has a market value of €36 billion, will offer 1.567 newly issued shares for each Banco BPM share and 6.958 for each Banca Generali share, valuing the targets at about €25.3 billion and €8.7 billion respectively.

That would imply offer prices of €16.729 per Banco BPM share, with no premium on Wednesday's close, and of €74.284 per Banca Generali, a 10% premium, MPS said.

MPS, which was bailed out by the state in 2017, was reprivatised in 2023 to 2024. Intesa is proposing breaking it up with Mediobanca remaining within the group while half of MPS branches, its Siena headquarters and its brand would be transferred to smaller lender BPER Banca.

Lovaglio has argued that would destroy value and praised recent comments by Italian Prime Minister Giorgia Meloni, who expressed hope that MPS would not be broken up.

($1 = 0.8553 euros)

(Reporting by Valentina Za, Andrea Mandala, Giulio Piovaccari and Mirko Miorelli; Writing by Giulio Piovaccari; Editing by Gavin Jones, David Holmes and Alexander Smith)