Mediobanca Launches €6.3 Billion Offer to Acquire Banca Generali, Financing the Deal with Generali Shares

Italy’s Mediobanca has announced a €6.3 billion offer to acquire Banca Generali, marking a significant move in the country’s banking sector as consolidation efforts intensify.

The offer, made public on Monday, is part of Mediobanca’s strategy to expand its wealth management business.

The acquisition will be funded through the sale of Mediobanca’s shares in Assicurazioni Generali, Italy’s largest insurer and the controlling shareholder of Banca Generali. Mediobanca holds a substantial 13% stake in Assicurazioni Generali, and it plans to use these shares to finance the deal. The transaction reflects Mediobanca’s goal of streamlining its operations and focusing on its wealth management division, positioning itself as a stronger player in the European market.

Mediobanca has proposed an exchange offer, offering €54.17 per share for Banca Generali, which represents an 11.4% premium over the bank’s closing share price on Friday. This offer values Banca Generali at approximately €5.7 billion, with the merger aimed at creating a leading European wealth management entity. The deal is subject to approval from Mediobanca shareholders, who are set to vote on the proposal at a meeting scheduled for June 16.

The proposed transaction is seen as a strategic shift for Mediobanca, which has faced growing pressure over its reliance on dividend income from its stake in Assicurazioni Generali, which has traditionally accounted for around one-quarter of its pre-tax profits. This move could help Mediobanca focus more on its core business and reduce its entanglement in governance disputes related to Generali.

In addition to the financial benefits for Mediobanca, including anticipated annual pre-tax cost savings of €150 million, the deal also promises potential value gains and a boost to Mediobanca’s earnings per share. Analysts have noted that the transaction could lead to stronger returns on tangible equity, potentially rising into the high teens or even exceeding 20%, if the integration proves successful.

For Banca Generali, the offer represents a significant premium, providing an immediate financial benefit to its shareholders. The deal also strengthens the position of Mediobanca’s wealth management division, which will absorb Banca Generali upon completion.

However, the deal could have broader implications for the Italian banking landscape. Notably, it could complicate efforts by the Italian government to find a suitable partner for Banca Monte dei Paschi di Siena, the country’s troubled lender, which has been repeatedly bailed out by the state. The government has long sought to offload its stake in Monte Paschi by facilitating a merger with other Italian financial institutions, but this latest development from Mediobanca may shift the dynamics of that process.

The acquisition is not yet a done deal, and there are likely to be further developments as the process moves forward. Nonetheless, the proposed merger has the potential to reshape the ownership and structure of Italy’s financial sector, potentially leading to a more focused and commercially-driven banking environment.

Bloomberg, Reuters, and the Financial Times contributed to this report.