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(Sharecast News) - Intesa Sanpaolo launched an unsolicited 30.6bn cash-and-share offer for Monte dei Paschi di Siena on Monday, setting up a potential bidding contest with Banco BPM after the latter proposed merger talks with the Tuscan lender.
Italy's largest bank said on Monday that a successful takeover of MPS would create the eurozone's second-largest banking group by market value after Santander, with a market capitalisation of 126bn and a target of 16bn in net income by 2029.
CNBC said Intesa's proposal represented a 12.5% premium to MPS's closing share price on Friday.
The move came hours after Banco BPM said its board had unanimously approved an approach to MPS to explore a merger of equals.
BPM said a combination with MPS would create a new national champion in Italian banking with a market value of about 50bn, and estimated annual pre-tax benefits of more than 1.1bn and earnings per share accretion of more than 10%.
MPS said it had received Banco BPM's proposal and would evaluate it.
It said it was unaware of any potential bid from Intesa and BPER when reports of a rival approach first emerged.
Intesa's offer included a plan to break up part of MPS.
As part of the proposal, Intesa reached an agreement with insurer Unipol, BPER's main shareholder, to sell a banking business made up of 635 MPS branches, about half of its retail network, along with the MPS brand.
The structure was designed to address potential competition concerns and preserve MPS as a retail banking presence.
The arrangement echoed Intesa's 2020 acquisition of UBI Banca, when it also worked with Unipol and BPER to resolve antitrust issues.
According to the Financial Times, BPER would take MPS's banking operations, while Intesa would retain its recently acquired Mediobanca unit and, through it, a 13% stake in Generali.
MPS has become the focal point of Italian banking consolidation after being bailed out by the state in 2017, reprivatised in 2023 and 2024, and then acquiring Mediobanca last year in a 17bn deal.
That transaction made MPS the largest investor in Generali, one of Italy's most important financial institutions and a major holder of Italian government bonds.
Banco BPM, Italy's fourth-largest bank, already owns 3.7% of MPS after investing in the lender during its reprivatisation.
Its board includes representatives of Crdit Agricole, the French bank that is Banco BPM's largest shareholder.
Italian officials told the Financial Times that some parts of the country's establishment were wary of a BPM-MPS deal because it could give Crdit Agricole indirect influence over Generali.
France's Crdit Agricole told CNBC it was "interested in analyzing value creation opportunities which can strengthen BPM," signalling support for Banco BPM's potential merger approach.
The developments marked the latest phase in a wider reshaping of Italy's fragmented banking sector.
The Italian government previously backed the idea of creating a "third pillar" to challenge Intesa and UniCredit, but consolidation efforts had repeatedly run into political and regulatory resistance.
UniCredit last year abandoned a bid for Banco BPM after government opposition, while its chief executive Andrea Orcel was now focused on a takeover of Germany's Commerzbank.
MPS's own position had been complicated by boardroom tensions.
Former chief executive Luigi Lovaglio was ousted in March after disagreements with board members and industrialist shareholder Francesco Gaetano Caltagirone, before shareholders voted in April to reinstate him.
Reporting by Josh White for Sharecast.com.