Banco BPM stands its ground, defends MPS merger plan

(Alliance News) - Banco BPM is pressing ahead with its play for Banca Monte dei Paschi di Siena, despite the EUR30.6 billion exchange offer launched by Intesa Sanpaolo in tandem with Unipol.

As reported by MF-Milano Finanza on Tuesday, the merger proposal put forward by the institution led by Giuseppe Castagna arrived just one day before the rival bid and is currently under review by the MPS board of directors.

The board of the Sienese bank, chaired by Cesare Bisoni, has commenced evaluations with the support of financial advisors UBS and Bank of America, alongside law firms BonelliErede and White & Case. In parallel, MPS confirmed that activities related to its integration with Mediobanca are proceeding according to previously announced plans.

Banco BPM's proposal is structured as a merger of equals, even though MPS boasts a market capitalization of approximately EUR27 billion - rising toward EUR30 billion following the exchange offer announcement - compared to Banco BPM's roughly EUR20 billion. The project forecasts total synergies exceeding EUR1.1 billion, with over EUR650 million stemming from cost reductions and more than EUR450 million from revenue enhancements.

According to Banco BPM, the transaction would create a group with a market capitalization exceeding EUR50 billion. Equita also views the strategic rationale of the tie-up favorably, noting that the new entity would become Italy's second-largest banking player by market share and the leader by branch count in Lombardy, Veneto, and Tuscany, offering a comprehensive product factory suite and further growth opportunities for Mediobanca.

However, observers point out that the final decision will also hinge on the assessment of the competing offer from Intesa Sanpaolo and Unipol.

Nevertheless, Banco BPM maintains greater strategic flexibility, as it is not subject to passivity rule restrictions. For this reason, the market does not yet consider the matter settled, as evidenced by the 0.8% rise in the stock price on the exchange.

In the background, potential developments involving UniCredit and Crédit Agricole remain. The French bank is already the largest shareholder in Banco BPM with a 22.9% stake and holds ECB authorization to increase its holding up to 29.9%.

By Antonio Di Giorgio, Alliance News reporter

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