MPS CEO upbeat on Mediobanca bid take-up, but crossing 50% enough for tax benefits

By Valentina Za and Gianluca Semeraro

MILAN (Reuters) -Monte dei Paschi CEO Luigi Lovaglio expressed confidence on Thursday that the take-up for his bank's bid for Mediobanca would be well above the level of 50% plus one share needed to unlock tax benefits.

After restructuring under Lovaglio, state-backed Monte dei Paschi (MPS) in January announced a hostile buyout offer for the Milanese merchant bank.

MPS is currently aiming for a 66.7% take-up, but speculation has mounted that it could lower the minimum threshold to ease its task.

By securing half of Mediobanca's capital plus one share, MPS can consolidate their financial accounts and tap tax credits stemming from past losses as profits grow. It has estimated a net 1.2 billion euro benefit for Mediobanca shareholders.

"We're determined to reach the take-up threshold (of 66.67%) we're currently targeting," Lovaglio told Sky TG24.

Asked if European Central Bank supervisors could object to a lower take-up threshold and set a minimum level, Lovaglio said he saw no reasons for that.

"It hasn't done so with any of the bids, so I don't think it's an issue. I'm confident we can launch the offer in early July and reach a good take-up," he said.

Two people with knowledge of the matter told Reuters the ECB is expected to set a number of provisions to offset potential risks in case MPS acquires a smaller portion of Mediobanca's capital than necessary to proceed with a full merger.

TWO FAMILIES' SUPPORT

MPS can count on the support of two leading Mediobanca shareholders, Italy's Caltagirone and Del Vecchio families, who have also become major investors in the Tuscan bank since the Treasury last sold a chunk of the bailed-out bank in November.

Caltagirone has raised its Mediobanca stake close to 10%, from 6.7% previously, a person close to the matter said on Thursday. The two families together now own nearly 30% of Mediobanca.

Lovaglio said he was confident that some institutional investors could also back his "unusual" project that aims to combine MPS' commercial franchise with Mediobanca's wealth management and investment banking

Caltagirone's stake increase comes ahead of a shareholder vote on June 14 on the proposed acquisition of private bank Banca Generali, which Mediobanca CEO Alberto Nagel has pitched to his shareholders as an alternative to the MPS deal.

Glass Lewis has joined other leading governance advisers in recommending a vote in favour of the Banca Generali deal on June 16. Two U.S. funds said on Thursday they would back the plan.

"I'm not worried... I think investors can back the Banca Generali deal and still tender their shares under our bid," Lovaglio said.

($1 = 0.8750 euros)

(Reporting by Valentina ZaEditing by Keith Weir and Gareth Jones)