Italy's MPS, Mediobanca approve merger plans after boardroom crisis

By Valentina Za

MILAN, March 11 (Reuters) - Italian banks Monte dei Paschi di Siena (MPS) BMPS.MI and Mediobanca MDBI.MI have approved steps toward a full merger, after tensions among shareholders and directors over the plan led the MPS board to vote against retaining its CEO.

MPS said late on Tuesday it would issue up to 1.6 billion euros ($1.9 billion) in new shares and offer Mediobanca investors 2.45 MPS shares for each Mediobanca share tendered.

The aim is to buy the 14% of the partner it doesn't already own and take it private.

The exchange ratio implies a roughly 3% premium to Tuesday's closing prices when adjusted for dividend payments, Reuters calculations showed. Shares in both banks closed higher, bucking the sector's .FTITLMS3010 1% drop.

NEW LEADER SOUGHT

The full merger is in line with the strategy for the combined group that MPS Chief Executive Luigi Lovaglio presented to investors on February 27, before the bank's board voted to deny him a new mandate.

MPS has put forward three alternative CEO candidates for shareholders to vote on in April.

Shareholders in MPS have until March 21 to file a rival slate.

There have been contacts in recent days among shareholders over a potential competing list of board nominees led by Lovaglio, but time is short to find enough suitable candidates, making such a prospect unlikely, a person close to the matter said.

Lovaglio, who led the bank’s restructuring, its return to private ownership and the takeover of its larger rival, had won backing from top shareholder Delfin and Italy's Treasury but not from No. 2 investor, Francesco Gaetano Caltagirone.

Caltagirone did not view the full Mediobanca acquisition as a priority despite pressure from the European Central Bank to complete the plan, sources have previously said.

MPS will spin Mediobanca off into an unlisted unit, which will retain the Mediobanca brand, the wealth management and investment banking businesses of the Milan lender it bought in a 16 billion euro cash‑and‑share deal.

The acquisition, eight years after MPS was rescued by the state, was the largest transaction in a consolidation wave reshaping Italy's banking sector.

MPS said Jefferies, JPMorgan, UBS, and Alvarez & Marsal acted as financial advisers, while Mediobanca worked with Morgan Stanley and Rothschild.
($1 = 0.8595 euros)