By Gianluca Semeraro and Valentina Za
MILAN (Reuters) -Mediobanca on Monday struck back in the takeover war gripping Italian finance with a 6.3 billion euro ($7 billion) offer for wealth manager Banca Generali it will finance by handing over its stake in insurer Generali.
The 13% stake, which dates back to the 1950s and makes Mediobanca the biggest Generali investor, has led the Milanese bank to clash with the other two major shareholders: construction magnate Francesco Gaetano Caltagirone and Delfin, the investment vehicle of Italy’s Del Vecchio family.
Together, they own 17% of Generali, as well as 27% of Mediobanca.
“We’ve been accused, rightly or wrongly, of relying too much on Generali,” Mediobanca CEO Alberto Nagel told reporters.
“This is a financially sound move that removes that issue.”
With a market value of 6.5 billion euros, the Generali stake allows Mediobanca to pay in full for a deal it has long been targeting, Nagel said.
Banca Generali is 50.2% owned by Generali, where Mediobanca last week scored a major victory against Caltagirone-Delfin by naming 10 out of 13 directors at the insurer, including CEO Philippe Donnet.
Nagel said he hoped to now start discussions with Generali and Banca Generali over the deal, which Morgan Stanley said provided “a coherent strategic fit”.
If not enough Banca Generali investors take up the tender offer, Mediobanca will sell chunks of its Generali stake on the market and use the money to buy shares in Banca Generali in order to get to 66.7%.
ALTERNATIVE PROJECTS
In the latest twist of the years-long feud between Nagel and Caltagirone-Delfin, the two have acquired almost 20% of state-backed Monte dei Paschi di Siena (MPS) and are supporting its hostile bid for Mediobanca.
Nagel said Mediobanca shareholders would now have the option of choosing between two alternative projects.
“If our shareholders back this deal they will be choosing one project and I don’t imagine they would then swap it for another.”
Mediobanca shareholders will vote on June 16 on the Banca Generali offer. The MPS bid should start weeks later.
The Banca Generali deal would make wealth management Mediobanca’s core business, while the MPS bid would plug Mediobanca’s operations, which comprise consumer finance and investment banking, into the Tuscan bank’s branch franchise.
Two people in MPS’ camp said the two projects were not mutually exclusive.
The consolidation frenzy shaking Italian banks comes as they brace for falling revenues as interest rates decline. Normally rare in banking, hostile moves have become the norm in Italy.
“You know we have been chasing this opportunity for many years,” Nagel said. “We have found that at this moment a lot of stars aligned.”
Caltagirone last week gained only three Generali board seats despite receiving eleventh hour support from UniCredit, which has bought 6.7% of Generali.
UniCredit’s strategy over Generali remains unclear, but bankers say CEO Andrea Orcel could eye wealth management deals with the insurer.
That, however, would put UniCredit on a collision course with Intesa Sanpaolo, Italy’s main bank, which is focused on wealth management and insurance.
It also requires Generali to ditch a controversial deal with French bank BPCE to merge their asset management operations.
Mediobanca would double its wealth management revenue to 45% of the total. It aims to expand Banca Generali’s insurance and asset management partnerships with Generali to the new combined entity.
“We would move from a financial to an industrial relationship with Generali,” Nagel said.
Shares in Generali fell 1.1%, with KBW analysts saying they were “slightly nervous that Generali is exiting a high growth/high margin arena.”
The exchange offer, which Mediobanca expects to complete by end-October, translates to a deal price of 54.17 euros per share, an 11% premium to Banca Generali’s last close.
Shares in Banca Generali rose 5.2%. Mediobanca lost 0.8%.
“We’re paying more than the stock’s record high and more than analysts’ price targets,” Nagel said.
($1 = 0.8796 euros)
(Additional reporting by Abinaya Vijayaraghavan in Bengaluru and Giancarlo Navach in Milan. Editing by Muralikumar Anantharaman, David Evans and Mark Potter)
