Italy bank merger wave heats up as Mediobanca eyes Banca Generali

Italian bank Mediobanca, itself battling to fend off a hostile takeover by a rival, announced on Monday a 6.3-billion-euro ($7.2 billion) bid to buy wealth management firm Banca Generali.

Mediobanca is planning to use its 13.1 percent stake in Italy's largest insurance company, Generali, to pay for the acquisition of the group subsidiary Banca Generali, the statement said.

"The combination between the two companies will produce a European market leader," Mediobanca said.

Mediobanca is itself trying to fend off a hostile takeover by state-backed Banca Monte Paschi di Siena (MPS) as the Italian banking industry sees a wave of hostile bids.

Mediobanca's offer stipulates that if it does not manage to acquire a minimum of 50 percent plus one of the total number of Banca Generali shares, then it would abandon its takeover bid.

It said the takeover would result in its wealth management revenues doubling to two billion euros and such profits increasing fourfold to 800 million euros.

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In a statement, it said the acquisition would "transform the relationship between Mediobanca and AG from a financial to a strong industrial partnership".

In January, Mediobanca rejected a 13.3-billion-euro bid from MPS, which had been backed by Prime Minister Giorgia Meloni's government.

The Mediobanca board branded the offer "devoid of industrial and financial rationale" and thus "destructive" for the bank.

MPS, the world's oldest bank, had wanted to create a banking group to rival the two biggest in the country, Intesa Sanpaolo and Unicredit.

MPS was bailed out by the Italian government in 2017, when it was on the verge of bankruptcy, and Rome became its main shareholder.

Banca Generali's shares were up 7.5 percent in morning trading while MPS gained 3.1 percent, Mediobanca rose 0.6 percent and Generali dropped almost two percent.

Source: AFP