Italy’s largest banking institution Intesa Sanpaolo revealed Monday its plans to pursue a €30.6 billion ($35 billion) unsolicited acquisition of competitor Monte dei Paschi di Siena (MPS), launching a new wave of industry consolidation.
After capturing one-fifth of Italy’s banking market through its 2020 purchase of mid-sized UBI, Intesa remained on the sidelines during last year’s merger activity across the sector, citing regulatory restrictions that blocked additional domestic growth opportunities.
To overcome regulatory hurdles, Intesa announced it has reached an agreement with insurance company Unipol, which holds the largest stake in BPER Banca, to divest a banking operation that includes 635 MPS locations and the MPS brand name, contingent on the bid’s success.
The partnership between Intesa and Unipol mirrors their collaboration during the UBI transaction.
According to Intesa, the merged organization would rank as the eurozone’s second-largest banking institution by market capitalization, following Spain’s Santander, boasting a valuation of €126 billion and targeting €16 billion in net income by 2029, compared to the combined €13.6 billion earned last year.
MPS, which received government assistance in 2017 before returning to private ownership in 2023-2024, became a central player in Italian banking consolidation following its acquisition of Mediobanca last year.
The Mediobanca purchase positioned MPS as the primary shareholder in insurance firm Generali, a highly sought-after entity within Italian financial circles.
Intesa, which centers its operations around wealth management and insurance services, previously pursued Generali in 2017 but abandoned those efforts and instead expanded its insurance operations independently.
UniCredit, Italy’s second-largest banking institution, established a significant position in Generali during the previous year.
In its announcement, Intesa stated its proposal includes a 12.5% premium above MPS’s Friday closing stock price, representing a total investment of €30.6 billion compared to MPS’s current market valuation of €27.4 billion.
Over the weekend, as speculation grew about Intesa’s potential move, Banco BPM revealed its board had unanimously decided to pursue discussions with MPS regarding a possible equal-partnership merger between the two institutions.
