Italian investment bank Mediobanca has dismissed Banca Monte dei Paschi di Siena’s (MPS) takeover proposal, citing lack of industrial and financial rationale.
This decision was made following a meeting, where the board reviewed the offer and rejected it, calling it ‘destructive’.
Last week, MPS made a €13.3bn ($14bn) all-share buyout bid for Mediobanca .
The board has voiced concerns that the offer could compromise Mediobanca’s identity and business profile.
It also believes that the offer could lead to a significant loss of customers, particularly in areas such as wealth management (WM) and investment banking.
The intrinsic value of MPS shares is also questioned due to substantial tax assets, non-performing loans (NPLs), and litigation risks, stated the bank.
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The bank predicts no benefits for its WM and investment banking (IB) segments, instead foreseeing a deterioration in these areas.
It also noted that the potential loss of clients and staff, coupled with a lack of cost synergies, further undermines the offer’s industrial rationale.
Financially, the offer is seen as detrimental to Mediobanca’s earnings profile, with expectations of growth based on the strategic plan contrasting with analyst consensus for MPS, which projects declining profits.
Additionally, the deal’s complexity is heightened by significant cross-shareholdings between Delfin, Caltagirone, MPS, and Assicurazioni Generali.
Mediobanca highlighted its focus on executing its “2023-26 Strategic Plan”, which is said to have already shown promising results, including growth in WM and corporate and investment banking (CIB).
Mediobanca’s WM division has surpassed €100bn ($104.3bn) in total financial assets. It aims to distribute €3.7bn ($3.85bn) to shareholders over three years.
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