MPS investors sink CEO's defence plan against Intesa bid

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By Valentina Za

SIENA, Italy, Oct 29 (Reuters) - Monte dei Paschi di Siena shareholders on Thursday voted down the defence plan CEO Luigi Lovaglio had put forward to fend off a €33 billion ($37 billion) takeover offer by Italy's biggest bank Intesa Sanpaolo.

The rejection was expected after Intesa won over the main MPS shareholders, Italy's Del Vecchio and Caltagirone families, who last year supported MPS's takeover of Mediobanca after the government brought them onboard as core investors.

Together they own roughly 30% of MPS. Investors holding around 60% of the bank's share capital opposed the plan.

Italy, which bailed out MPS in 2017 and reprivatised it in 2023-24, has tried in vain for years to build around the bank a third big player to rival Intesa and UniCredit.

To derail Intesa's bid, Lovaglio had proposed twin all-share acquisition offers for rival mid-sized bank Banco BPM and wealth manager Banca Generali, worth a combined €34 billion.

The vote clears the way for Intesa's offer, which received the European Central Bank's approval this week but faces a critical antitrust verdict next month.

"While the antitrust decision is missing, the terms of the offer are not set," Lovaglio said.

Lovaglio said that the MPS board had rendered a service to shareholders by proposing a counter plan that prompted Intesa to offer an extra €800 million in cash.

"The match is not over and while the process is ongoing our commitment and our responsibility towards all stakeholders stand," Lovaglio said.

Earlier on Thursday, shareholders had rejected a plan for the full merger of Mediobanca into MPS.

Lovaglio said it had all gone according to script after Delfin, the Del Vecchio family's holding company, "signed a pact" with Intesa.

Intesa had vowed to walk away if the two buyout offers were approved and secured Delfin's commitment to tender.

It had recommended MPS shareholders reject the Mediobanca merger without making it a dealbreaker.

Lovaglio, who turned around MPS after taking the reins in 2022, stunned Italy's financial elites with the acquisition of Mediobanca - a storied Milanese merchant bank and the main investor in insurer Generali, a coveted financial asset.

Lovaglio's push to merge Mediobanca into MPS had put him on a collision course with key MPS shareholder Francesco Gaetano Caltagirone and cost him his job.

Lovaglio was reinstated at the helm in April thanks to support from Delfin, but the holding company has meanwhile become embroiled in a shareholder tussle.

The CEO received several rounds of applause from shareholders and expressions of gratitude from bank staff attending the meeting, with one employee saying Lovaglio had "saved them from certain death" back in 2022.

'BUTCHERING' CLAIMS

Many among the bank's local shareholders complained the government and large investors such as Delfin had betrayed MPS and Siena, making impassioned appeals in favour of the plan.

"This is a predatory move ... and could mark a point of no return for our community ... while the government hides behind its neutral stance," CGIL union leader Alice D'Ercole said.

With elections looming next year, Rome has said it is no longer involved in the banking consolidation process sweeping Italy.

To address antitrust problems, Intesa is planning to sell half of the roughly 1,200 MPS branches to insurer Unipol, which will combine them with those of bank BPER.

"Instead of braving international markets ... Intesa has opted for the disrespectful dismembering of the world's oldest bank," said Leandro Cini, a shareholder and former employee.

"This bid is butchering MPS: Intesa will take the prime cuts, including Mediobanca and the Generali stake ... and Unipol the lower-grade cuts," Cini said.

($1 = 0.8971 euros)

(Reporting by Valentina Za, editing by Alvise Armellini and Susan Fenton)