The Financial Times demolishes the strategy of Lovaglio: Mps' plan to acquire Banco Bpm and Banca Generali is crazy

The Monte dei Paschi di Siena has faced sharp criticism from Financial Times over its strategy to resist an acquisition bid from Intesa Sanpaolo. The British newspaper’s Lex column described the bank’s plan as “mad,” arguing that its attempt to secure independence through simultaneous acquisitions of Banco BPM and Banca Generali could backfire. According to the report, the move might instead push shareholders toward accepting Intesa’s offer, which was previously rejected by Mps. Mps, one of Italy’s oldest banks, currently faces pressure from Intesa Sanpaolo, which has made a takeover proposal. In response, the bank’s chief executive, Luigi Lovaglio, proposed merging with two other institutions, Banco BPM and Banca Generali, to create a larger financial entity. The idea is that this tripartite merger would allow Mps to remain independent while growing significantly. However, Financial Times argues that the strategy lacks coherence and could have unintended consequences. The proposed deal involves acquiring Banco BPM, a mid-sized institution, and Banca Generali, a wealth-management group. On paper, the three-way merger offers some financial appeal. Mps estimates cost synergies of €1.2 billion, with the combined value of the new entity reaching around €8.4 billion. But the analysis goes further, noting that Mps is also considering paying a special dividend of €4 billion before the merger. Based on these figures, the 50% stake held by Mps in the new entity would be valued at more than €40 billion, according to Lex. This valuation is 15% higher than Mps’s current market capitalization, making the plan seem even more unrealistic. Despite the potential financial upside, the strategy appears to lack incentives for the shareholders of Banco BPM and Banca Generali. The former would be acquired without any premium, while the latter would receive only a modest 10% premium. These terms, according to Financial Times, fail to make the deal attractive enough for the target banks. As such, the plan risks being perceived as desperate rather than strategic. The Financial Times suggests that Mps’s defensive approach could inadvertently strengthen Intesa’s position. By appearing willing to take extreme measures to avoid being taken over, Mps may be sending a signal that it is less desirable as a standalone entity. This perception could discourage other potential buyers and reinforce Intesa’s claim as the preferred option. The situation highlights the complex dynamics within Italy’s banking sector, where regulatory pressures, shareholder interests, and competitive positioning play critical roles. Mps has long been under scrutiny for its financial health, and its attempts to navigate this crisis have drawn both support and skepticism. The recent strategy represents another step in a broader effort to maintain control over the bank’s future. As the debate continues, the outcome will depend on how effectively Mps can communicate its vision and whether the proposed merger can gain traction among stakeholders. For now, the Financial Times’s assessment underscores the challenges facing Mps in its ongoing battle to retain independence.