Mediobanca rejects Monte dei Paschi buyout bid, saying it is "devoid" of rationale

Investing.com - Italian bank Mediobanca (BIT:MDBI) has rejected a takeover bid from peer Banca Monte dei Paschi di Siena (BIT:BMPS), arguing that the offer was "destructive" for its shareholders.

In a statement on Tuesday that was approved by Mediobanca's board of directors, the company said Monte dei Paschi's unexpected 13.3 billion euro all-share buyout bid last Friday, which has since declined in value, was "devoid of industrial and financial rationale".

Mediobanca particularly argued that MPS's proposal would eat away at the strength of its business model by siphoning off clients and bankers from its investment banking and wealth management divisions. Under CEO Alberto Nagel, Medibanca has leaned heavily into these areas.

"Mediobanca believes that the MPS offer [...] [d]estroys value for the shareholders of both Mediobanca and MPS, given the likelihood of a significant loss of customers in those business areas (such as Wealth Management and Investment Banking) which require professionals who are independent and of high standing and professionalism," Mediobanca said.

The bank's board, which is due to formally present its advice to shareholders once MPS's bid prospectus is made public, would dent Mediobanca's financial results because MPS is more exposed to anticipated drops in interest rates.

Shares in MPS were trading lower by 2% in mid-afternoon European trading on Tuesday, after having shed 2% on Monday and 7% on Friday. Meanwhile, Mediobanca's stock price slipped by 3.9%.

MPS, a commercial bank that was rescued by the Italian government in 2017, has pledged to address issues with its balance sheet and roll out deep headcount reductions to bring down expenses. Rome currently backs a tie-up between MPS and Mediobanca, which would create a third major bank in Italy along with Unicredit (BIT:CRDI) and Intesa (LON:0HBC) Sanpaolo (OTC:ISNPY).