MPS shareholders set to sink CEO's defence plan against Intesa bid

By Valentina Za

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

The plan was expected to be rejected as Intesa has secured the backing of the main MPS shareholders, Italy's Del Vecchio and Caltagirone families, making it impossible for Lovaglio to muster the required two-thirds approval.

Rejection of the plan would clear the way for Intesa's offer for the world's oldest bank and trigger an extra €800 million in cash for MPS investors, ending Lovaglio's attempt to build a rival banking group through acquisitions.

In a first blow for the CEO ahead of the key vote on the defence scheme, shareholders rejected a plan for the full merger of Mediobanca, which MPS bought last year, into MPS.

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

Small shareholders made impassioned appeals in favour of the plan at the meeting.

"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.

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. 

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

'BUTCHERING' CLAIMS

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 cut, Mediobanca and the Generali stake ... Unipol lower-grade cuts," Cini said.

Lovaglio, who took the reins in 2022, has restructured MPS and led it to acquire Milanese merchant bank Mediobanca, the biggest deal so far in the country's banking consolidation process.

Through Mediobanca, MPS has become the main investor in insurer Generali, Italy's biggest insurer and a coveted financial asset.

Lovaglio's push to fully 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, the Del Vecchio family's holding company, which has meanwhile become embroiled in a shareholder tussle and sided with Intesa.

To sink Lovaglio's defence, Intesa added €800 million in cash to its bid earlier this month provided the Tuscan bank's investors reject the twin offers for Banco BPM and Banca Generali. 

Intesa also asked for a rejection of the Mediobanca merger without, however, making a dealbreaker. Leading proxy advisers had recommended approving it, but only a third of investors voted in favour on Thursday.

Under Italian takeover laws, any management initiative that could thwart a buyout offer must first gain shareholder approval. 

($1 = 0.8971 euros)

(Reporting by Valentina Za, editing by Alvise Armellini)