MPS’s Revised Bid for Mediobanca and Its Implications for Italian Banking Consolidation

Banca Monte dei Paschi di Siena’s (MPS) hostile bid for Mediobanca has become a focal point of Italy’s banking sector, with strategic and regulatory implications that could reshape the industry. The revised offer, valued at €15.5 billion, faces a critical juncture as of August 2025, with an acceptance rate of 27.06%—well below the 50% threshold required for unconditional approval by the European Central Bank (ECB) [3]. This shortfall has forced MPS to consider adding a cash component to its all-share offer, a move that could incentivize institutional shareholders like Enpam and Enasarco to tender their stakes [1]. However, such a revision risks straining MPS’s capital position, despite its robust Common Equity Tier 1 (CET1) ratio of 18.6% as of Q2 2025 [2].

The regulatory landscape is equally fraught. The European Commission’s ongoing state aid investigation into the Italian government’s 2024 stake sale in MPS—allocating a 15% stake to a select group of investors, including politically connected figures—has cast a shadow over the bid’s legitimacy [4]. If the Commission rules the sale constitutes unfair state aid, the Italian government may be forced to reverse the transaction, destabilizing MPS’s capital base and complicating its ability to fund the Mediobanca merger [1]. Meanwhile, the ECB’s conditional approval hinges on MPS demonstrating “de facto control” of Mediobanca, a requirement that remains unmet [3].

Mediobanca’s counter-strategy further complicates the scenario. The target’s proposed acquisition of Banca Generali, approved by the ECB in August 2025, aims to strengthen its independence and raise the cost of the MPS bid [2]. With a shareholder vote on the Banca Generali deal rescheduled to September 25, Mediobanca’s board is signaling its commitment to resisting the takeover while enhancing its own strategic value [2]. This maneuver not only delays the MPS bid but also raises the stakes for a potential regulatory showdown.

From a shareholder value perspective, the bid’s success hinges on three inflection points:
1. Regulatory Clearance: The ECB’s capital adequacy tests in late September and the EU Commission’s state aid ruling by October 2025 will determine whether MPS can proceed without violating regulatory thresholds [1][3].
2. Bid Revision: A cash sweetener could boost the acceptance rate but may dilute MPS’s equity or require additional capital raising, potentially eroding shareholder returns [1].
3. Strategic Counterplay: Mediobanca’s Banca Generali acquisition, if finalized, could force MPS to revise its offer terms or abandon the bid altogether [2].

Investors must weigh these risks against the potential rewards of a merged entity with €500 billion in assets and €700 million in annual synergies [2]. However, the regulatory and governance uncertainties—particularly around Caltagirone’s cross-ownership and the ECB’s conditional approval—suggest a high probability of prolonged legal and political battles [3].

Investment Recommendation:
Given the regulatory and strategic uncertainties, a cautious approach is warranted. Investors should monitor the ECB’s September capital tests and the EU Commission’s October state aid ruling. If the acceptance rate remains below 50% and the Banca Generali deal is approved, the likelihood of a revised MPS bid diminishes, potentially leading to a breakdown in negotiations. Conversely, a successful regulatory clearance and a revised bid with a cash component could unlock value for Mediobanca shareholders but may dilute MPS’s equity. Until key inflection points are resolved, holding positions in both banks is advisable, with a bias toward Mediobanca given its stronger governance stance and strategic countermeasures.

Source:
[1] MPS's Revised Mediobanca Bid and Strategic Implications [https://www.ainvest.com/news/mps-revised-mediobanca-bid-strategic-implications-italian-banking-consolidation-2509]
[2] Monte Paschi's Strategic Bid for Mediobanca and Its ... [https://www.ainvest.com/news/monte-paschi-strategic-bid-mediobanca-implications-italian-banking-consolidation-2509]
[3] Italy's Banking Sector at a Crossroads [https://www.ainvest.com/news/italy-banking-sector-crossroads-assessing-future-monte-dei-paschi-mediobanca-bid-political-regulatory-shifts-2508]
[4] Italy's stake sale of Monte dei Paschi under EU scrutiny, FT reports [https://www.reuters.com/business/finance/italys-stake-sale-monte-dei-paschi-under-eu-scrutiny-ft-reports-2025-06-24/]