10 Days to Request Final Hearing After Intesa Undertakings Accepted, With New Restrictions on Generali

Key Facts

Italy’s competition authority sent its final opinion on Intesa Sanpaolo’s offer to acquire Banca Monte dei Paschi to the two banks and Generali, largely accepting the undertakings proposed by Intesa while adding behavioral measures tied to Generali’s stake, according to a report by Alliance News via MarketScreener. The procedure gives the parties 10 days to request a final hearing, with approval expected in time to allow the offer to launch in late November. This brings the competition review close to its procedural end before the takeover offer begins, but does not remove the other regulatory steps required for its launch. The reported restrictions focus on two areas: the bank branches to be separated from Monte dei Paschi and governance arrangements related to Generali’s stake. Intesa had already agreed to sell part of Monte dei Paschi’s business to UniPol to address competition concerns. The new restrictions, according to the report, concern additional branches and arrangements to limit information sharing between the two groups.

Alliance News reported that the authority had asked for several dozen additional branches to be included in the divestment, branches that Intesa said would not be sold to UniPol. This distinguishes the previously announced agreement with the insurer from the authority’s reported request to expand the scope of branches covered by the measures. On June 8, Intesa announced an agreement to sell an independent banking entity to UniPol after completion of the offer and receipt of the necessary authorizations. The entity comprises 635 Monte dei Paschi branches, along with the related assets and legal relationships. Intesa said in its disclosure that the proposed sale was part of arrangements to address competition concerns, not a new condition added in the final opinion. Earlier, as of October 5, a Reuters report said Intesa had finalized the selection of 445 branches for sale, while retaining the option to make changes to another 190 branches to address competition concerns.

The behavioral measures concern Generali’s governance: the report said Intesa would be required to appoint fully independent members to its board to limit information sharing between the two groups. Intesa had described Mediobanca’s stake in Generali as a non-controlling equity investment, with no involvement in the company’s governance, under the equity method of accounting. A Reuters report said Intesa could face behavioral measures tied to the stake, in addition to the agreed branch sale. The bank’s chief executive said the final outcome should be economically consistent with what was included in the market proposal. He also said Intesa did not expect to have to sell additional branches beyond those it had already agreed to sell to UniPol for competition reasons. If further branches were required to be sold, the chief executive added, the bank would seek another buyer.

The final opinion followed an investigation opened by the competition authority on September 14 to assess the deal’s effects across multiple banking and insurance markets, at both local and national levels. The review places the banking and insurance dimensions of the deal at the center of the competition assessment, given the sale of Monte dei Paschi branches on one side and the stake linked to Generali on the other. La Repubblica reported that, in response to the restrictions, Generali was turning to the European competition authority. This adds a European dimension to the review, alongside the process led by the Italian authority. Before the report was published, Intesa had said it was confident about the competition decision. Reuters quoted the chief executive as saying the bank expected the final outcome to be economically consistent with its proposal to the market.

The offer terms announced in June include an exchange of 16 new Intesa shares for every 10 Monte dei Paschi shares, plus one euro in cash for each share tendered. Intesa described the transaction in a disclosure as a voluntary public tender and exchange offer, with its launch subject to obtaining the necessary prior approvals. The chief executive had said the offer was scheduled to begin in the week of November 23, after approval from Italy’s market authority, which was expected in the week following his remarks. Alliance News reported that the offer was expected to launch on November 23 or 24, while another Reuters report on November 3 said the acceptance period was expected to begin in about three weeks. These dates set a near-term timeline for the next steps, while the parties retain the option to request a final hearing during the 10-day period. Against the backdrop of the bank’s preparations for the offer, Intesa’s net profit in the third quarter was 2.65 billion euros, exceeding the average analyst forecast of 2.50 billion euros.