Monte dei Paschi di Siena has put a combined 34 billion euros on the table in a single move, offering to buy Banco BPM and Banca Generali at the same time rather than choosing between them. The two all share offers were approved by Paschi's board and disclosed together, an unusual structure that lets each deal stand or fall on its own.
Under the terms, Banco BPM is valued at 25.3 billion euros and Banca Generali at 8.7 billion euros, based on the companies' share prices in the days before the offers became public. Because the bids are not conditionally linked, Paschi does not need both deals to close for either one to go through, which gives the bank room to end up bigger even if only one target agrees to a deal.
The offers are chief executive Luigi Lovaglio's answer to an unsolicited approach Monte dei Paschi received from Intesa Sanpaolo, Italy's largest bank, which had proposed a cash and share takeover of Paschi worth roughly 30.6 billion euros. Rather than fight that bid purely on price or governance grounds, Lovaglio has chosen to make Paschi a larger, more complicated target by adding two acquisitions of its own.
Pulling off either deal, let alone both, would be a striking turn for a bank that needed a government bailout within the past decade and has spent years rebuilding its capital position and its credibility with investors. Success would put Monte dei Paschi in the position of consolidator rather than takeover target in Italian banking, a role reversal few would have predicted for the bank even a year or two ago.
The dual bid structure has no clean precedent among recent European bank mergers, and it now puts pressure on shareholders at both Banco BPM and Banca Generali to weigh offers that were announced as a pair rather than negotiated individually. How each target's board and investors respond, and how Intesa Sanpaolo recalibrates its own approach to Paschi in the meantime, will determine whether Lovaglio's bet on growth as a defense actually pays off.