MPS Shares Slide as Mediobanca Board Weighs Bid

MPS shares continued their downward trajectory on Tuesday, January 28, as the board of Mediobanca gathered to discuss the surprise bid by the smaller rival. The Italian banking sector has been rattled by a series of takeover tussles, with the latest move being Monte dei Paschi's (MPS) all-share offer for Mediobanca, valued at 13.3 billion euros ($13.9 billion). The bid, announced on Friday, January 24, has sparked investor skepticism and a sell-off in MPS shares, which closed down 7% on Friday and have since extended their losses.

The Mediobanca board is expected to make clear its disapproval of the bid, as it views it unfavorably, given that it comes from a smaller rival that the state had to save from collapse in 2017. The board will only be able to give formal advice to shareholders once the bid's prospectus is public, in a few months' time. However, the board is expected to make its views known at the meeting, which could further impact MPS shares.

MPS has returned to profit and dividends after receiving more than 10.5 billion euros in fresh cash between 2017 and 2022, which it has used to clean up its balance sheet and lay off thousands of staff to slash costs. The deal has the blessing of the Italian government, which wants to see a third strong banking force emerge to compete with Intesa Sanpaolo and UniCredit. However, analysts remain concerned about the limited scope for cost savings and the ability to retain Mediobanca's investment bankers.

The MPS-Mediobanca merger is part of a wave of consolidation in the Italian banking sector, with several recent moves involving potential mergers and acquisitions. The proposed takeover is the latest move in this trend, but it has left analysts puzzled and investors concerned about the limited scope for cost savings and the ability to retain Mediobanca's investment bankers.



The MPS-Mediobanca merger would bring together MPS's strength in retail and commercial business with that of Mediobanca in private banking and wealth management. The deal envisions 700 million euros in pre-tax synergies per year and aims to deliver significant profitability levels. However, analysts have expressed doubts about the proposed deal, warning of potential dis-synergies and a modest premium recognized.

The Mediobanca board's assessment of the MPS bid is crucial in determining the future of the proposed acquisition. The board's views, along with those of shareholders, regulators, and other stakeholders, will ultimately shape the outcome of the MPS-Mediobanca merger. As the board meets to discuss the bid, investors and analysts will be watching closely to see how the situation unfolds.



In conclusion, MPS shares have slid further as the Mediobanca board meets to discuss the surprise bid. The board's assessment of the bid is crucial in determining the future of the proposed acquisition, with analysts and investors watching closely to see how the situation unfolds. The MPS-Mediobanca merger would bring together the strengths of both banks, but analysts remain concerned about the limited scope for cost savings and the ability to retain Mediobanca's investment bankers. The Italian banking sector continues to be impacted by a wave of consolidation, with the MPS-Mediobanca merger being the latest move in this trend.