Mps board says Intesa's raised offer still pays a premium below comparable deals

A reply that keeps the plan

Monte dei Paschi di Siena's board met in an extraordinary session on 12 October and issued a statement that evening. The statement did not postpone the shareholder meeting, announce a countermove or name a white knight. Intesa Sanpaolo had raised the cash component of its offer on 3 October from 1 to 1.25 euros per share, lifting total cash from 3 to 3.8 billion euros. Intesa also made the continuation of its offer conditional on shareholders rejecting Mps's plan, which combines a double tender offer on Banco BPM and Banca Generali with a 4 billion euro extraordinary dividend. According to Corriere della Sera, the board approved its analysis with six independent directors voting against it. According to Il Messaggero, citing ANSA, the minority also opposed the content of the statement.

The premium dispute

The statement says the premium on the raised offer is 15.3%, measured against Intesa's official share price of 5 June, compared with 12.5% for the original bid. Mps argues that this remains well below the roughly 30% premium observed in comparable voluntary tender offers in Italian banking. Kbw, which advises Mps, had said in early October, before the raise, that Intesa had room to lift the cash component up to 2 euros. The board also argues that the exchange ratio adjustment for the dividend does not increase the value originally attributed to the share component. In its words:

The premium remains lower than the average observed in comparable voluntary public offers in the Italian banking sector, equal to about 30% of the official price before the announcement.

Branches, synergies and the industrial plan

Mps says Intesa's condition offers no certainty on completing its offer, and that shareholders would give up Mps's industrial project without the information needed to judge Intesa's bid. The board describes Intesa's plan as splitting Mps between separate ownership and industrial perimeters, with half of the branches going to Unipol. Il Giornale reports that Unipol has already identified 445 of the 635 Mps branches that would be transferred if Intesa's offer succeeds, while Corriere says the branches would be divided between Intesa and Unipol-Bper without shareholders knowing which go where. Mps also questions the 2.9 billion euro synergies promised by Intesa, calling them too high for the perimeter that would remain with Intesa. The board asks that any assessment of Intesa's implications for Generali take into account Mps's presence in insurance, asset management and wealth management, where a 13.3% stake in Generali is also mentioned. According to the prospectus of the 2.5 billion euro capital increase, shareholders who do not subscribe face dilution of about 14.49% if the issue is fully taken up.

What happens next

The shareholder meeting stays set for 29 October. Il Messaggero reports that the double offer and the 4 billion euro dividend are expected to fail against the opposition of at least a third of shareholders, and that more than 33% of the capital is lining up against Lovaglio's plan. Corriere reports that Crédit Agricole refused the Banco BPM proposal and that Delfin, Caltagirone and Benetton opposed the double defensive offer. Intesa's offer document has not yet been published, and the offer still needs ECB authorization, which Corriere says is expected between 20 and 25 October, along with Consob clearance and an Antitrust review. Mps says its board will only give a full evaluation of Intesa's offer once that document is published.