Agreement reached on MPS. And Siena remains part of the Monte brand

“Siena and Tuscany will play an important role,” said Intesa Sanpaolo’s CEO, Carlo Messina, at the end of the shareholders’ meeting which yesterday offered him virtually unanimous support for the takeover bid for MPS. These remarks were intended to allay fears in a region where the future of MPS has proved to be a sensitive issue both socially and politically, and echo the statements made by Carlo Cimbri, CEO of Unipol, in a recent interview with Il Sole 24 Ore: “Montepaschi will take the lead”.

It is now clear that there has been a rethink regarding the removal of the word ‘Siena’ from the new banking group’s brand, as initially feared by Intesa-Unipol. Whether this will be enough to defuse the formation of a ‘broad-based’ coalition in Tuscany – where the right and left are joining forces to prevent the ‘break-up’ of MPS – remains to be seen. In the meantime, however, Intesa Sanpaolo has reached a key milestone in its 30-billion-euro takeover and exchange offer for the Siena-based bank, which is due to begin by December. It is too early to have official confirmation of the decisions taken yesterday by individual shareholders of Ca’ de Sass, but, given the overwhelming results of the shareholders’ meeting vote, it is clear that major funds such as Blackrock, Vanguard and Norges – all of which hold stakes in MPS – also voted in favour. MPS will hold its shareholders’ meeting on 29 October to assess the dual transaction involving Banco BPM and Banca Generali. Of course, the history of MPS’s takeover bid for Mediobanca shows that funds can vote opportunistically, depending on the shareholding structure in which they find themselves. Furthermore, it is precisely the world of institutional investors that MPS’s CEO, Luigi Lovaglio, has been turning to in recent weeks to secure approval for the dual bid aimed at countering Intesa Sanpaolo’s initiative.

Late on Wednesday evening, the two prospectuses relating to MPS’s bids for Banco BPM and Banca Generali were filed with Consob. These bids had been announced to the market in the middle of August, causing some surprise at the boldness of the move. Lovaglio’s plan now is to proceed with both offers, launching them in the first half of December and concluding them in February of the new year. But for the time being, this is merely a plan on paper; to become operational, it must overcome the constraints of the passivity rule and be approved by the general meeting on 29 October with two-thirds of the votes of the capital present. This will be no easy test, even for a banker as full of surprises as Lovaglio.

How will the main shareholder, Delfin – which holds over 17 per cent of Monte’s share capital – vote? Whilst Caltagirone’s (approximately 10 per cent) vote against is predictable, the Ministry of Economy and Finance (MEF) (4.8 per cent) has declared it will remain neutral (it will probably not attend the meeting), there is great uncertainty as to how the Del Vecchio family’s company will act, and it is also unclear what the position of Banco BPM (3.7 per cent) will be, as it is a party to the matter and is expected to vote on a bid for itself (apparently, legal opinions are divided). For this reason, it will be the funds – which represent 45 per cent of MPS’s share capital – that will tip the balance at the shareholders’ meeting on 29 October. In theory, it is also possible that Lovaglio may only secure the shareholders’ approval for one of the two transactions, given that they will be voted on separately, as confirmed by financial sources.

The option that currently appears most feasible is Banca Generali, particularly after Lovaglio and CEO Gian Maria Mossa were spotted having lunch together on Wednesday at a restaurant in Milan (as reported by Mf). And given that Generali’s CEO, Philippe Donnet, has already stated his willingness to consider MPS’s proposal, which involves a share swap with Generali. This willingness, it is understood, would remain even if the deal involving Banco BPM were to fall through; this deal currently appears to be the most complex to pull off, as it involves an agreement with the Milanese bank’s main shareholder, Crédit Agricole.

Ultimately, Intesa’s takeover bid has a head start of a month and a half and is currently the only one offering a cash premium of 3.5 billion to MPS shareholders (compared with a dividend of 4 billion offered by Lovaglio, who aims to distribute part of Monte’s stake in Generali).