On 14 September, the Competition and Market Authority launched an investigation into the 30.6 billion euro takeover bid with which Intesa Sanpaolo aims for exclusive control of Banca Monte dei Paschi di Siena. This is the last piece of the tortuous path of the public purchase and exchange offer launched by the banking giant. The purpose of Antitrust is to measure the effects on the banking and insurance markets, both at a local and national level.
Because the Agcm has started the investigation
When two large operators merge, the law requires prior notification to the Antitrust, which initiates an examination of the concentration which begins with a first phase of 30 days.
If doubts remain about the competitive effects, the second phase begins, the actual investigation. The investigation must close within 90 days and may lead to:
- green light;
- to the ban;
- to the authorization conditioned by remedies, which in this case may be the transfer of branches or branches of the company.
Speaking of effects “in different and numerous markets”, the Authority points out that the overlaps are large and distributed across the territory.
Intesa’s takeover bid on MPS: the phases of the operation
Intesa Sanpaolo announced the operation on 8 June, with a communication pursuant to article 102 of the Consolidated finance text.
The initial conditions
The consideration is 16 newly issued Intesa shares for every 10 Mps shares (exchange ratio equal to 1.6) plus 1 euro in cash for each security contributed, for an implicit valuation of approximately 10.09 euros per share.
The declared premium was 12.5% on the closing price of June 5 and rose to 17.4% and 18.7% on the 3 and 6 month volume weighted average prices (Vwap).
The offer remains conditional on reaching 66.67% of the capital, a threshold that Intesa can reduce.
On the same day, the bank signed a binding agreement with Unipol to sell, following a successful transaction, a banking entity with the Monte dei Paschi brand and approximately 635 branches.
The takeover bid was formally promoted on 27 June with the filing of the offer document with Consob, which concerns over 3 billion MPS shares. In parallel, Intesa has submitted requests for authorization to the ECB, Bank of Italy, Ivass and the competition authorities of the various countries in which the future group operates.
No from MPS and yes from Intesa
The board of directors of Monte dei Paschi, with the support of the advisors Ubs and Bofa, judged the offer to be inadequate in price, keeping the door open to an alternative merger with Banco Bpm.
In the meantime, the value of the exchange has slipped below the stock market price of MPS, effectively transforming the initial premium into a discount.
The extraordinary meeting of Intesa approved with 96.96% of the votes the delegation to the Board of Directors to issue up to 5.7 billion new shares, the consideration to be delivered to MPS shareholders who join.
Because today the offer is worth less than expected
The takeover bid is largely paper against paper: 16 Intesa shares every 10 Mps. Therefore the value for the shareholder is not fixed but follows the price of the Intesa stock day by day.
If the Intesa share goes down or the MPS share goes up, the premium becomes thinner, as has been happening since this summer. The economic terms, for now, have not been changed: the market is waiting to understand whether Intesa will adjust the offer to convince Monte’s shareholders.
Insurance and golden power, the other fronts
The scope of the operation goes beyond banks. MPS controls Mediobanca, Generali’s largest shareholder with approximately 13% of the capital. By absorbing MPS, Intesa would strengthen its weight in managed savings and life insurance, where it is already among the leading operators.
Intesa, for its part, has characterized the Generali operation as a temporary investment since the announcement
of a purely financial nature.
The possible application of golden power by the Government also weighs in the background. This tool allows the Executive to place conditions on operations in strategic sectors.
What changes for MPS account holders
The concrete consequences for MPS or Intesa customers are limited. Those who have an account do not have to do anything and the contracts remain valid until the offer is closed.
A decisive role will instead be played by MPS shareholders, who will be asked during the membership period to choose whether to exchange the securities for 16 Intesa shares for every 10 plus 1 euro. In any case, we would like to remind you that a part of Monte dei Paschi, with its brand and 635 branches, is in any case destined to pass to Bper (Unipol group).
