Monte dei Paschi Shareholders Reject Mediobanca Merger Into Group by 63.65%
Key Facts
Monte dei Paschi di Siena shareholders on Thursday, October 29, rejected a plan to merge Mediobanca into the group, with 63.65% voting against it, according to Reuters' summary of the vote result. Chief Executive Luigi Lovaglio had put forward the plan, which did not win shareholder approval. The capital represented at Thursday's meeting was 65.86%, Reuters reported, citing the bank's chairman, Cesare Bisoni. Meeting documents defined the resolution as the merger of Mediobanca through its absorption into Monte dei Paschi. The proposed plan was therefore not approved, while Intesa's offer to acquire Monte dei Paschi remained a separate track.
The plan would have carried out a share exchange under which Mediobanca shareholders would receive 2.450 ordinary shares in Monte dei Paschi for each ordinary share they held in Mediobanca. The ratio excluded treasury shares and shares held by Monte dei Paschi at completion of the merger. To carry out the exchange, the documents provided for the issuance of up to 272,012,804 new ordinary shares in Monte dei Paschi. The bank's documents said the transaction aimed to simplify the ownership structure and operating lines and achieve greater alignment between the corporate structure and the group's growth. The documents also linked the merger to the transfer of most liabilities eligible for minimum own funds and eligible liabilities requirements to Monte dei Paschi, supporting compliance after the group's new targets were applied.
The vote came as Intesa Sanpaolo was offering to acquire all of Monte dei Paschi's ordinary shares in a voluntary public offer combining an acquisition with a share exchange. Reuters had reported that Intesa asked Monte dei Paschi shareholders to reject the Mediobanca merger plan, but did not make rejection of the plan a condition for its offer to proceed. Reuters said Delfin and Caltagirone's support for Intesa made it impossible for Lovaglio's plan to secure the required two-thirds majority. Lovaglio had proposed two share-swap takeover offers for Banco BPM and Banca Generali, with a combined value of 34 billion euros, aiming to thwart Intesa's offer. Under Italian takeover law, Reuters reported, any management initiative that could hinder a takeover offer must first receive shareholder approval.
Intesa gave an operational rationale for preferring to merge Monte dei Paschi and Mediobanca after completing its offer, saying that taking over the process could limit the risk of adverse effects from merging and operating IT systems, and avoid duplicating costs. Addressing shareholders, Lovaglio said the bank had achieved "what many believed was impossible over the past four years." He added, according to Reuters, that Monte dei Paschi's acquisition of Mediobanca was delivering better-than-expected results. He also said he was surprised by Intesa's change of position, describing it as initially supportive of merging Mediobanca into Monte dei Paschi. These positions put the rejected plan and the separate takeover offer at the center of a shareholder dispute over the sequence of the banks' merger and management of the process.
Intesa announced on October 28 that it had obtained all the necessary prior sector approvals for its offer for Monte dei Paschi. The company said the offer document would be subject to approval by Consob, expected within ten days of the last prior sector approval. Reuters reported that Intesa raised its offer to 33 billion euros before Thursday's vote. In an earlier statement, Intesa said approval of one or more items on Monte dei Paschi's meeting agenda under numbers 3 to 5 would mean the conditions of its offer were not met and the offer would become definitively ineffective. Those items concerned offers for Banco BPM and Banca Generali, capital increases and the extraordinary distribution. Intesa had asked shareholders to reject the Mediobanca merger, but did not make that a condition for its offer to proceed.