Mediobanca is fighting for its independence. They launched a 6.3 billion euro offer for wealth manager Banca Generali. They will finance the offer through their stake in insurer Generali.
Mediobanca is the biggest investor in Generali. This has pitted the Milanese bank against Francesco Gaetano Caltagirone and Delfin, the Del Vecchio family’s investment vehicle.
They own 17% of Generali and around 27% of Mediobanca.
Caltagirone and Delfin acquired almost 20% of Monte dei Paschi di Siena. They are supporting its hostile bid for Mediobanca.
MPS’ takeover attempt is one of many hostile offers impacting Italian banks. The banks enjoyed record profits due to higher interest rates after a deep clean-up, but now they are bracing for declining revenues.
Hostile moves have become the norm in Italy.
Mediobanca CEO Alberto Nagel had long held ambitions over Banca Generali. He wanted to strengthen the wealth management business.
“You know we have been chasing this opportunity for many years,” Nagel told analysts. “We have found that at this moment a lot of stars aligned.”
Mediobanca managed to appoint 10 directors on the 13-strong Generali board last week. This included CEO Philippe Donnet. It was a major victory against Caltagirone and Delfin.
Caltagirone only secured three seats. UniCredit, which recently bought 6.7% of Generali, supported Caltagirone at the last minute. CEO Andrea Orcel could be interested in wealth management deals with the insurer.
UniCredit’s strategy over Generali remains unclear.
Mediobanca will double its wealth management revenue with the deal to 45% of the total. It intends to keep Banca Generali’s partnerships with Generali in insurance and asset management. Mediobanca will expand them to the new combined entity.
“Through this large-scale reallocation of capital to wealth management, the combination will transform the relationship between Mediobanca and Generali from a financial investment to a strong industrial partnership,” the company said.
Mediobanca shareholders on June 16 will need to approve the Banca Generali acquisition with a simple majority. This is due to the MPS bid and Italian takeover rules. Mediobanca’s 13% stake in Generali is worth around 6.5 billion euros at current market prices.
Shares in Generali fell 1.8%. Traders said the deal would see the insurer let go of a profitable business in return for its own shares. Generali owns 50.2% of Banca Generali.
The two Mediobanca directors appointed by Delfin failed to back the Banca Generali bid.
Delfin and Caltagirone have accused Nagel of relying excessively on income from the Generali stake. They also accuse him of exercising excessive influence over the insurer.
The exchange offer translates to a deal price of 54.17 euros per share. It represents an 11% premium to Banca Generali’s last close.
Mediobanca expects to complete the exchange offer by end-October. Shares in Banca Generali rose 8%, while Mediobanca was flat.
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