MPS presents a €13.3 billion offer to acquire Mediobanca and create a banking giant.

Banca Monte dei Paschi di Siena (MPS), the oldest bank in the world with roots dating back to 1472, has launched an ambitious €13.3 billion bid to acquire Mediobanca, one of Italy's leading financial institutions. This strategic move, approved by MPS's board of directors, aims to create a "national champion" in the Italian banking sector, thereby consolidating the Tuscan entity's presence in an ever-evolving and competitive market. MPS's proposal establishes an exchange ratio of 23 of its own shares for every 10 shares of Mediobanca. This offer implies a valuation of €15.992 per share of its rival, representing a premium of 5.03% compared to the closing price on Thursday. However, acceptance of this offer is not automatic; MPS seeks at least 66.67% of the exercisable voting rights to finalize this ambitious transaction, in addition to being subject to the necessary regulatory approvals. Luigi Lovaglio, CEO of MPS, stated that this operation aims not only to generate immediate value for the shareholders of both entities but also aspires to contribute to the development of a new consolidation model in the Italian banking sector. Lovaglio emphasized the importance of protecting and enhancing the brands of both banks, suggesting that the union could be beneficial for the country as a whole, fostering growth and financial stability. From a financial perspective, MPS argued that this transaction would allow for the unlocking of the value of deferred tax assets (DTA) it holds due to accumulated losses, accelerating their utilization over the next six years. The combination of both entities is expected to generate taxable income that would allow the leveraging of approximately €2.9 billion in DTA, which could translate into a material benefit in terms of capital for the new group resulting from the merger. Additionally, MPS projected pre-tax synergies of approximately €700 million per year, derived from cost optimization and increased revenues. It is expected that about €300 million will come from revenue synergies due to the expansion of the product and service offering, while another €300 million will be achieved through the reduction of operational costs. However, the transaction is not without challenges. MPS has anticipated integration costs of around €600 million in the first year, reflecting the complexity and cost of executing a merger of such magnitude in the competitive Italian banking sector. Effective management of these costs will be crucial for the long-term success of the operation. In the stock market, the initial response to the offer was mixed. Mediobanca's shares rose by 5.17% following the announcement, indicating positive investor interest in the potential merger. In contrast, MPS's shares fell by more than 6%, which could reflect market concerns about the viability of the offer or perceptions of the risks associated with the integration. This move by MPS is part of a broader trend of consolidation in the Italian financial sector, which has gained momentum since late 2024. In recent months, several significant transactions have been observed, including UniCredit's bid for Banco BPM, which would create Italy's largest lender. These dynamics suggest that the banking industry in Italy is at a transformative moment, seeking to merge and adapt to new economic realities. The Italian government has also been active in this area, with the sale of stakes in MPS as part of its efforts to reduce its involvement in the entity and promote financial stability. This proactive government approach highlights the importance of banking consolidation in ensuring the health of the Italian financial system as a whole. As this MPS offer unfolds and market and regulatory reactions are assessed, the future of the Italian banking sector may be at a turning point. The creation of a "national champion" could have a significant impact not only on the directly involved entities but also on the Italian economy as a whole, presenting both opportunities and challenges on the horizon.