Italy's biggest bank makes $35 billion bid for rival MPS

The offer would create the eurozone's second-largest bank and marks the latest chapter in MPS' remarkable turnaround.

Italy's largest lender, Intesa Sanpaolo, has launched an unsolicited EUR30.6 billion ($35 billion) cash-and-share bid for peer Monte dei Paschi di Siena (MPS), in a deal that would create the eurozone's second-largest bank and reshape the Italian financial sector.

The offer values MPS at €27.4 billion and represents a 12.5% premium to the bank's closing share price on Friday.

The deal requires Intesa to secure approval from shareholders representing at least 66.7% of MPS’ share capital before the bid concludes in December.

The proposal marks the latest chapter in the remarkable turnaround of MPS, the world's oldest surviving bank. After being rescued by the Italian government in 2017 following years of losses and bad-loan problems, MPS was gradually reprivatized between 2023 and 2024 and has since returned to profitability.

For Intesa, the acquisition would further strengthen its position as Italy’s dominant banking group.

The combined entity would have a market capitalization of approximately €126 billion ($145.3 billion), surpassing the likes of BNP Paribas and UniCredit and nearing Santander, and is targeting net income of €16 billion ($18.5 billion) by 2029, up from the two banks’ combined profits of €13.6 billion ($15.7 billion) last year.

To address potential competition concerns, Intesa has already reached an agreement with insurer Unipol to sell a banking business comprising roughly half of MPS's branch network if the acquisition proceeds. The move is designed to smooth the path toward regulatory approval while maintaining competition in the Italian banking market.

However, the transaction could disrupt plans elsewhere in the Italian banking market.

Banco BPM, Italy’s fourth-largest lender, had been widely viewed as the most likely merger partner for MPS and had recently signaled its interest in opening talks with the bank.

Under Italian takeover rules, however, Intesa's formal offer now prevents MPS from agreeing a competing transaction without shareholder approval.

Investors will also be watching the Italian government's response.

Although Rome retains so-called "golden powers" that can be used to influence strategic transactions, a recent Reuters report citing people close to the matter stated that Prime Minister Giorgia Meloni's government intends to remain neutral regarding competing bids for MPS.

The Economy Ministry said Intesa's offer reflected the restored value of the bank following its state rescue in 2017, while Deputy Prime Minister Matteo Salvini said the future of MPS was "up to the market to decide."

For shareholders, the key question will be whether Intesa can successfully integrate MPS while delivering the earnings growth and synergies promised by management.

If completed, the transaction would rank among the largest banking deals in Italian history and further accelerate the consolidation reshaping Europe's financial sector.

Shares in Intesa Sanpaolo closed at EUR5.60 on Monday in Milan, down 1.4% from Friday’s close. The stock is down 5.57% year-to-date.

In contrast, Monte dei Paschi di Siena’s stock is up 12.98% from Friday.

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