Intesa launches $35 billion Monte dei Paschi bid to redraw Italian financial map

June 8 (Reuters) - Italy's largest banking group Intesa Sanpaolo said on Monday it had made a €30.6 billion ($35 billion) unsolicited cash-and-share bid to buy smaller rival Monte dei Paschi di Siena (MPS) to create the euro zone's second-largest lender. 

 Intesa's move appears to sideline Banco BPM, after the latter said on Sunday it wanted to open talks with MPS about a potential merger, amid mounting expectations of an Intesa bid.

As part of its offer, Intesa struck a deal with insurer Unipol, the main investor in BPER Banca.

Under the deal, Intesa would sell to Unipol about half of the MPS retail network it had acquired through the takeover. This network would then be combined with BPER to create a bank that would operate under the MPS brand. 

Here's some initial reaction from analysts:

BARCLAYS ANALYSTS PAOLA SABBIONE & DIBIN MELEDATH KORUTHU

"For both Intesa and BPER, if they get branches from Unipol, the transaction makes financial and strategic sense in our view, and is a positive move."

"We believe the government would support the creation of the second largest Italian banking group with Banco BPM-MPS, (especially the Minister of Economy and Lega), but might also like Intesa's move (especially Prime Minister Meloni)."

BOFA ANALYSTS ANTONIO REALE & ROHAN DATTA

"We believe Monte dei Paschi remains undervalued."

"There are very few products in Italy in which Intesa has a market share below its natural c.22% level: consumer finance and corporate and institutional banking (CIB)/advisory are two of them."  

"Intesa would keep Mediobanca which comes with CIB, consumer finance and wealth management as well as a 13% stake in Generali which comes with Danish compromise."

"BPER could overtake UniCredit if the deal proposed goes through, which could reportedly trigger UniCredit to review its available options in Italy, one of their core markets."

EQUITA ANALYST ANDREA LISI

"We believe that the transaction makes sense to further strengthen Intesa's leadership in Italy, not only through the further development of the banking channel, but also by becoming the first operator in Italy in Consumer Credit."

ING ANALYST SUVI PLATERINK KOSONEN

"In the case of a BPM and MPS combination Italy would have three larger (domestic) institutions, which sounds like something many political (bodies) could approve of."

"In the case of the Intesa alternative the bank seeks to make the combination more attractive by leaving room for the creation of another player (MPS remains plus BPER), keeping the banking field populated also by smaller institutions."

RBC CAPITAL MARKETS ANALYST PABLO DE LA TORRE CUEVAS

"At face value, the proposed transaction makes long-term strategic sense for Intesa, solidifying an already very strong position in its domestic market while adding core capabilities and scale."

"The deal's context (with a competing "merger of equals" proposed by Banco BPM with MPS) and previous expressions by political leaders regarding preferred domestic banking consolidation that explicitly excludes Intesa will certainly play a role in the final outcome of the transaction."

KBW ANALYSTS HUGO CRUZ AND BEN MAHER

"The combination of Intesa and BPER dwarfs Banco BPM in terms of market cap (...) and CET1 capacity, and they have already worked together in the acquisition of UBI in 2020/21."

"We also think the Intesa/BPER option could generate more synergies because of the differences in the product factories."

JEFFERIES ANALYSTS MARCO NICOLAI & JOSEPH DICKERSON

"The transaction aims to strengthen the wealth management, protection and advisory nature of Intesa's business."

(Reporting by Enrico Sciacovelli, Philippe Leroy Beaulieu, Romolo Tosiani, editing by Gavin Jones)