Mediobanca Readies Defenses After Unsolicited Bid by Paschi-OxBig News Network

(Bloomberg) — Mediobanca SpA’s chief executive officer said a takeover attempt by smaller rival Banca Monte dei Paschi di Siena SpA was unsolicited, as the Italian investment bank prepared to respond and possibly defend itself.

“The offer has not been agreed on and the board of directors will meet in the next few days to examine it and express its assessments in this regard with the aim of protecting the interests of all stakeholders,” CEO Alberto Nagel said in a letter to staff seen by Bloomberg.

The bank’s board will meet on Tuesday to review the surprise bid, people familiar with the matter said. The all-share offer values Mediobanca at around €12.4 billion ($13 billion) based on Friday’s close. Complicating a potential defense, the Italian government has said it supports a deal with Monte Paschi, which is still part-owned by the state. 

Mediobanca will now position itself in the wake of the bid, Nagel said in the letter, which was earlier reported by Ansa news agency. The Milan-based lender sees the offer as hostile, a person familiar with the matter told Bloomberg, asking not to be identified discussing private information.

A Mediobanca representative declined to comment on the letter or the board meeting.  

Shares of Monte Paschi declined 2.4% at 9:17 a.m. in Milan trading, extending Friday’s 6.9% drop. Mediobanca fell 0.2%.  

Monte Paschi’s shock move reflects its rapid turnaround in recent years under CEO Luigi Lovaglio, following a government bailout in 2009 before being privatized. It is also a sign of Italy’s interest in creating a third major bank in the country amid a flurry of dealmaking in recent months. 

Paschi is now “perfectly healed” and able to embark on ambitious moves like the offer for Mediobanca, Prime Minister Giorgia Meloni said on Saturday.

“If the deal comes to fruition obviously we will evaluate the birth of that third pole we’ve been talking about for a long time,” Meloni said. 

Italy became the center of European banking consolidation last year, sparked by UniCredit SpA’s unwelcome bid for Commerzbank AG in Germany — followed by an unsolicited play for Banco BPM SpA. 

Analysts, however, have so far been skeptical of the Paschi move. KBW’s Hugo Cruz said in a reaction note that the deal at first sight looks like it “has limited chances of success.” The offer was at a 5% premium to Mediobanca’s share price before the deal was announced, a cushion that disappeared as Paschi’s shares dropped 6.9% to €6.49 in Milan on Friday, while Mediobanca rose 7.7%.

In a statement Friday, Paschi said the acquisition would enable it to add wealth management operations and cut €300 million in annual costs. 

(Updates with value as of Friday in third paragraph, share reaction in sixth.)

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