Mediobanca rejects MPS takeover bid, calling it ‘destructive of value’

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Mediobanca rejected a €7 billion takeover bid from Banca Monte dei Paschi di Siena (MPS), dismissing the offer as “strongly destructive of value” and setting the stage for one of the most dramatic banking battles Italy has seen in years.

In a press release on Tuesday, the Milan-based investment bank, known for its high-margin businesses in wealth management and investment banking, warned that merging with MPS would erode shareholder value, drive away top clients, and weaken its independent advisory model.

“The Board of Directors of Mediobanca finds that the Offer is devoid of industrial and financial rationale and is therefore destructive for Mediobanca,” Mediobanca stated.

For MPS, the world’s oldest bank, the deal represented an opportunity to create a larger, more competitive banking group, one it claims could unlock €700 million in annual cost synergies.

But for Mediobanca, which has spent years carving out a distinct role in Italy’s financial system, the offer looks more like a threat than an opportunity.

The message from Mediobanca’s board was clear: this deal is fundamentally flawed.

MPS’s initial takeover proposal for Mediobanca offered 23 MPS shares for every 10 Mediobanca shares, valuing Mediobanca stock at €15.99 per share, a 5% premium to its 23 January closing price.

Two banks, two visions

At the heart of the dispute is a fundamental difference in strategy.

Mediobanca has spent years moving away from traditional lending, focusing instead on investment banking and wealth management, businesses that generate stable, high-margin revenues.

It has positioned itself as a trusted, independent financial adviser—an image it believes would be compromised under MPS’s traditional retail and SME banking model.

MPS, on the other hand, is still trying to shake off the challenges of the past decade.

Having undergone a €2.5 billion state bailout in 2017, the Siena-based bank remains heavily reliant on retail banking, an area Mediobanca sees as less profitable and more exposed to economic downturns.

Last Friday, the world’s oldest bank and a recipient of a government bailout, made an unexpected move on Friday by launching an all-share takeover bid for Mediobanca (MB). The proposal offers 23 MPS shares for every 10 Mediobanca shares, effectively valuing Mediobanca’s stock at €15.99 per share—a 5% premium to its closing price on 23 January.

For Mediobanca, the risks of a merger outweigh any potential benefits.

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According to the Milan-based institution, there are no real cost synergies in a deal with MPS as the two banks have very different distribution networks, meaning there’s little opportunity to cut costs.

Furthermore, Mediobanca claimed that its independence would be compromised. Mediobanca’s investment banking and advisory businesses rely on conflict-free relationships with corporate clients, something that could be disrupted under MPS’s commercial banking model.

Perhaps most tellingly, Mediobanca pointed out that MPS’s offer implies a discount of 3% to its pre-announcement stock price—a rare dynamic in takeovers, where bidders typically offer a premium to win over shareholders.

Markets reactions

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Since news of the bid emerged last week, MPS shares have dropped nearly 10%, reflecting concerns that the bank may lack the financial strength to execute such an ambitious takeover.

Mediobanca shares had initially jumped 8%, though they later slipped 3.5% on Tuesday as the deal collapsed.