Trieste – The insurance group Assicurazioni Generali is approaching the troubled bank Monte dei Paschi di Siena. The board of directors has agreed to review the unsolicited exchange offer through which the bank seeks to gain control of the subsidiary Banca Generali. The decision carries significant weight, as Generali holds a 50.2 percent stake in the bank, making it the controlling shareholder.
The offer calls for a pure stock swap: For each Banca Generali share, MPS is offering 6.958 of its own shares, representing a premium of about 10 percent over the most recent trading price. For the offer to succeed, the bank must secure at least 50 percent plus one share—which is virtually impossible without the parent company’s approval. The value of the transaction is estimated at approximately 8.7 billion euros.
A multi-pronged maneuver
Behind this move is Luigi Lovaglio, the CEO of Monte dei Paschi. He is pursuing several goals at once: Alongside the offer for Banca Generali, there is an offer on the table for Banco BPM, which its board of directors has already rejected, calling it a takeover without a real premium. In total, Lovaglio’s plans amount to a volume of around 25 billion euros. The whole move is seen as a defensive maneuver with which the long-established Siena-based bank is fending off a takeover attempt by industry giant Intesa Sanpaolo.
Open Outlet
Generali emphasizes that the offer was neither solicited nor arranged in advance; however, the company intends to evaluate it with a view to a possible broader industrial partnership. The board of directors is thus deliberately taking its time to conduct a thorough review. The fate of the entire transaction will ultimately be decided by the MPS shareholders’ meeting, which is scheduled for October 29.
Observers see significant hurdles. The rating agency Fitch points to considerable execution risks and numerous unresolved issues. Whether a new financial giant will ultimately emerge or the web of competing bids will unravel once again remains to be seen.
