Mediobanca Counters in Italy’s Banking M&A Battle with $7 Billion Offer for Banca Generali

Italy's Mediobanca retaliated on Monday in its quest for autonomy by unveiling a 6.3 billion euro ($7.15 billion) bid for the private bank Banca Generali, funded through its share in the insurer Generali. Mediobanca is working to prevent a takeover bid from the state-supported Monte dei Paschi di Siena. Italy is experiencing a wave of aggressive bids, which has traditionally been uncommon in the banking sector, as financial institutions prepare for declining earnings, with interest rates falling after driving unprecedented profits in recent times. Mediobanca's CEO, Alberto Nagel, has aimed for an acquisition of Banca Generali from Generali to enhance Mediobanca's wealth management division.

One earlier effort had failed and added to the ongoing tension between Nagel and two dissenting shareholders in Generali and Mediobanca. Mediobanca stated that the purchase would double its wealth management income, raising it to 45 per cent of the overall total. It mentioned plans to refresh the collaborations Banca Generali held with Generali in insurance and asset management, extending them to the newly merged organisation. "It stated that this significant reallocation of capital towards wealth management will shift the relationship between Mediobanca and Generali from a financial investment to a robust industrial partnership."

Mediobanca announced its offer for Banca Generali following a win on Thursday over the two opposing investors in both Mediobanca and Generali, as other Generali shareholders decided to retain Mediobanca-supported CEO Philippe Donnet in the leading position at the insurer. The two shareholders, construction tycoon Francesco Gaetano Caltagirone and Delfin, the investment arm of Italy's Del Vecchio family, have also invested in MPS and expressed their backing for its acquisition proposal for Mediobanca. Delfin and Caltagirone jointly hold approximately 27 per cent of Mediobanca, about 17 per cent of Generali, and close to 20 per cent of MPS. Owing to the MPS bid and regulations regarding Italian takeovers, Mediobanca must obtain shareholder consent for the acquisition of Banca Generali, which it will pursue on June 16.

ALSO READ: Prime Minister Narendra Modi addresses Rozgar Mela by distributing over 51,000 appointment Letters

Mediobanca is the top shareholder in Generali, representing more than a third of its revenue. The 13 per cent ownership is valued at approximately 6.5 billion euros based on current market values. Assicurazioni Generali detiene il 50,2 per cent di Banca Generali. Mediobanca stated that the two directors designated by Delfin, the primary investor in Mediobanca, did not support the Banca Generali offer. Delfin and Caltagirone have charged Nagel with being overly dependent on revenue from the Generali investment and exerting too much control over the insurer. The exchange offer, which Mediobanca anticipates finishing by the end of October, equates to a transaction price of 54.17 euros per share, representing an 11 per cent premium over Banca Generali's most recent closing price.

($1 = 0.8796 euros)