Italy's MPS, mediobanca to approve financial terms of full merger

MPS and Mediobanca to Finalize Terms of Major Italian Bank Merger

Key Developments in the MPS-Mediobanca Merger

By Valentina Za

Board Approvals and Merger Details

MILAN, March 10 (Reuters) - The boards of Italy's Banca Monte dei Paschi di Siena (MPS) and Mediobanca are due to approve on Tuesday the terms on which MPS will buy the 14% of the partner it doesn't already own and merge with it.

MPS, which the state bailed out in 2017 and re-privatised in 2023-2024, last year took over Mediobanca in a 16 billion euro ($19 billion) deal, the biggest move in a wave of consolidation reshaping Italian banking.

Leadership and Strategic Tensions

The strategy for the combined group has pitted MPS CEO Luigi Lovaglio against leading investor Francesco Gaetano Caltagirone, who is also a long-standing investor in Generali, Italy's biggest insurer.

Through its control of Mediobanca, MPS has become the biggest shareholder in Generali.

Timeline and Market Reactions

Lovaglio on February 17 secured board backing for plans to buy 100% of Mediobanca and merge it with MPS, leading the market to expect the terms of the transaction to be announced on February 27 when MPS presented a multi-year strategy for the combined group.

But MPS said that day that the share swap ratio for the deal would be announced on March 10, leaving investors hanging and sparking a selloff.

Leadership Uncertainty and Investor Dynamics

Uncertainty mounted further when the MPS board last week voted to deny Lovaglio a new term as CEO. 

Lovaglio's mandate ends in April and he had been seeking reappointment. He took on the role in 2022 and turned MPS around.

Lovaglio had the backing of the largest MPS shareholder, the Del Vecchio family's investment vehicle Delfin, but not of Caltagirone, who did not regard the Mediobanca merger as a priority. 

Investor Communications and Future Outlook

Sources told Reuters on Monday that, contrary to earlier plans, Lovaglio would not meet investors as customary immediately after the unveiling of a new strategy.    

A person close to the situation said MPS, however, would attend Morgan Stanley's annual conference on Europe's financial sectors in London next week, while further investor meetings to discuss the strategy were being considered.     

($1 = 0.8597 euros)

(Reporting by Valentina Za, Editing by Keith Weir)