By Gianluca Semeraro
MILAN (Reuters) -Italian merchant bank Mediobanca set out a plan to return 4.9 billion euros ($5.74 billion) to shareholders over the next three years, as it seeks to fend off a hostile bid from smaller rival Banca Monte dei Paschi di Siena (MPS).
Mediobanca reiterated in a statement on Friday that MPS’ offer “lacks an industrial and financial rationale for Mediobanca shareholders and carries clear and significant execution risks.”
After gaining regulatory approval from the European Central Bank on Wednesday, MPS is ready to launch its all-share bid for Mediobanca next month.
In an attempt to become too big for MPS to swallow, Mediobanca proposed in April to buy private bank Banca Generali , but was forced to delay a shareholder vote to September 25 to avoid a possible defeat after investors opposing the deal increased their holdings in the merchant bank.
Mediobanca CEO Alberto Nagel told analysts on Friday the Banca Generali deal would result in “a very powerful combination” and would be “very transformative”.
On the other hand, he added, merging with MPS, “a group which is an undifferentiated mid-sized commercial bank” will lead to Mediobanca being priced “at lower multiples” and “generate important revenue attrition”.
In its updated three-year plan to 2028, Mediobanca confirmed a strategy focused on growing its wealth management business, with its corporate and investment banking segment providing support, and consumer finance operations serving as a driver of diversification against macroeconomic risks.
“This virtuous path will be further strengthened by the offer for Banca Generali”, it said.
Mediobanca sees net profit growing 45% over the three financial years to 2028, reaching 1.9 billion euros, and expects revenue to rise at an annual average rate of 6% to over 4.4 billion euros.
In its previous three-year plan to 2026, Mediobanca had planned to return more than 4 billion euros to shareholders over the period and forecast a net profit above 1.4 billion euros.
Also under the new plan, Mediobanca will issue up to 750 million euros in Additional Tier 1 bonds, Nagel said.
($1 = 0.8537 euros)
(Reporting by Gianluca Semeraro; editing by Alvise Armellini, Jane Merriman and Elaine Hardcastle)
