European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Banca Monte dei Paschi di Siena / Event-Driven

Banca Monte dei Paschi di Siena (BMPS IM)

<ul>
<li>Banco BPM has withdrawn from merger talks after Crédit Agricole objected, leaving Intesa’s unsolicited offer as the only developed transaction; Rome says its 4.86% stake will not disrupt the process.</li>
<li>At 6 August closes, Intesa’s offer implied €11.875 per MPS share versus €11.878 spot, leaving the spread effectively flat after narrowing 322bp since our June initiation.</li>
<li>Our expected value is €12.06, 1.5% above spot, but existing terms offer no return; the trade still depends on a sweetener, with materially greater downside in delay or break.</li>
</ul>


Banco BPM has withdrawn from merger talks after Crédit Agricole objected, leaving Intesa’s unsolicited offer as the only developed transaction; Rome says its 4.86% stake will not disrupt the process.
At 6 August closes, Intesa’s offer implied €11.875 per MPS share versus €11.878 spot, leaving the spread effectively flat after narrowing 322bp since our June initiation.
Our expected value is €12.06, 1.5% above spot, but existing terms offer no return; the trade still depends on a sweetener, with materially greater downside in delay or break.


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Banca Monte dei Paschi di Siena / Equity Bottom-Up

<ul>
  <li>Following a significant turnaround and a successful €2.5 billion capital increase in late 2022, BMPS has returned to robust profitability and reinstated dividend payments, marking a pivotal shift from its troubled past.</li>
  <li>The bank is at the center of major consolidation activity within the Italian banking sector, with an unsolicited offer from Intesa Sanpaolo highlighting its strategic importance and potential for an acquisition-driven re-rating.</li>
  <li>While the operational restructuring has yielded strong financial results, the bank's future is heavily influenced by M&amp;A outcomes, regulatory hurdles, and the macroeconomic environment in Italy, presenting both significant opportunities and risks.</li>
</ul><p><em>This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.</em></p>


  Following a significant turnaround and a successful €2.5 billion capital increase in late 2022, BMPS has returned to robust profitability and reinstated dividend payments, marking a pivotal shift from its troubled past.
  The bank is at the center of major consolidation activity within the Italian banking sector, with an unsolicited offer from Intesa Sanpaolo highlighting its strategic importance and potential for an acquisition-driven re-rating.
  While the operational restructuring has yielded strong financial results, the bank's future is heavily influenced by M&amp;A outcomes, regulatory hurdles, and the macroeconomic environment in Italy, presenting both significant opportunities and risks.
This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

Primer: Banca Monte dei Paschi di Siena (BMPS IM) - Aug 2026

<ul>
<li>ISP launches an unsolicited offer for BMPS: 1.6 ISP shares plus €1 cash. Using 9 June closes, implied €10.03 vs €10.37 spot, leaving a −3.24% gross spread.</li>
<li>The bid looks pre-emptive versus Banco BPM’s “merger of equals” approach. BMPS’ Mediobanca stake and merger plan complicate the stack; the register is block-driven, so pricing is negotiable.</li>
<li>This is not carry: long BMPS/short 1.6×ISP pays for optionality on a sweetener, a competing outcome, or ISP share upside. Base-case EV is ~€10.41 per share (+0.39%).</li>
</ul>


ISP launches an unsolicited offer for BMPS: 1.6 ISP shares plus €1 cash. Using 9 June closes, implied €10.03 vs €10.37 spot, leaving a −3.24% gross spread.
The bid looks pre-emptive versus Banco BPM’s “merger of equals” approach. BMPS’ Mediobanca stake and merger plan complicate the stack; the register is block-driven, so pricing is negotiable.
This is not carry: long BMPS/short 1.6×ISP pays for optionality on a sweetener, a competing outcome, or ISP share upside. Base-case EV is ~€10.41 per share (+0.39%).


All Roads Lead to Siena: Intesa Moves on BMPS

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Thematic (Sector/Industry)

<ul>
<li>BPCE, the co-operative banking group and majority shareholder of <a href="https://www.smartkarma.com/entities/natixis-sa" target="_blank" data-smartkarma-citation="entities:21493:1" rel="noopener">Natixis SA (KN FP)</a> , is offering €4 per share to 29.3% owned by Natixis minority shareholders</li>
<li>Since the replacement of Francois Riahi as CEO by Nicolas Namais last August, Natixis has been brought under closer control by BPCE</li>
<li>We believe that this move will tighten BPCE control and accelerate the restructuring in the asset management and investment banking arenas</li>
<li>Even though this deal is a specific case, in broader terms, it reflects there is appetite for banking deals at current valuations, and that European bank M&amp;A is largely focused on intra-country deals, as has recently been seen in Spain and Italy</li>
<li>A successful offer would result in Natixis being delisting and it implies a “take out” PBV ratio of 0.7x and PE multiple of 15.8x for 2021, based on consensus estimates, which should be appealing to minorities</li>
<li>Risks to our constructive views on European banks M&amp;A prospects include regulatory hurdles, at the national and supra-national levels, as well as capital constraints and credit quality challenges</li>
</ul>


BPCE, the co-operative banking group and majority shareholder of Natixis SA (KN FP) , is offering €4 per share to 29.3% owned by Natixis minority shareholders
Since the replacement of Francois Riahi as CEO by Nicolas Namais last August, Natixis has been brought under closer control by BPCE
We believe that this move will tighten BPCE control and accelerate the restructuring in the asset management and investment banking arenas
Even though this deal is a specific case, in broader terms, it reflects there is appetite for banking deals at current valuations, and that European bank M&amp;A is largely focused on intra-country deals, as has recently been seen in Spain and Italy
A successful offer would result in Natixis being delisting and it implies a “take out” PBV ratio of 0.7x and PE multiple of 15.8x for 2021, based on consensus estimates, which should be appealing to minorities
Risks to our constructive views on European banks M&amp;A prospects include regulatory hurdles, at the national and supra-national levels, as well as capital constraints and credit quality challenges


Natixis (KN FP) - BPCE: European Bank Consolidation Rolls On

<ul>
<li>The elephant in the Italian bank M&amp;A room is government controlled <a href="https://www.smartkarma.com/entities/banca-monte-dei-paschi-di-siena" target="_blank" data-smartkarma-citation="entities:21162:1" rel="noopener">Banca Monte dei Paschi di Siena (BMPS IM)</a>, which needs to find a merger partner in 2021; will that be <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1" rel="noopener">UniCredit SpA (UCG IM)</a>, post-Mustier, and who could be its new CEO?</li>
<li>We believe that, in the event of a Unicredit acquisition of BMPS, it would require meaningful “government sponsorship”; in effect, for BMPS, pre-deal, to dispose of the bulk of its NPLs – which is underway – and for a capital infusion that renders the deal to be capital neutral for Unicredit</li>
<li>The other big M&amp;A unknowns relate to the listed mid-cap banks especially <a href="https://www.smartkarma.com/entities/banco-bpm-spa" target="_blank" data-smartkarma-citation="entities:28121:1" rel="noopener">Banco BPM SpA (BAMI IM)</a> and <a href="https://www.smartkarma.com/entities/bper-banca-s-p-a" target="_blank" data-smartkarma-citation="entities:21165:1" rel="noopener">BPER Banca S.p.A (BPE IM)</a>; these banks need to cut costs and branch networks, which can be more readily incorporated into a merger restructuring plan</li>
<li>We believe that the risk of a BMPS acquisition is largely priced into Unicredit shares, and we expect its wide PBV discount to premium valued <a href="https://www.smartkarma.com/entities/intesa-sanpaolo-spa" target="_blank" data-smartkarma-citation="entities:21200:1" rel="noopener">Intesa Sanpaolo (ISP IM)</a> to narrow;  our recommendation is to go long Unicredit, short Intesa</li>
<li>We think <a href="https://www.smartkarma.com/entities/credit-agricole-sa" target="_blank" data-smartkarma-citation="entities:21373:1" rel="noopener">Credit Agricole Sa (ACA FP)</a> is unlikely to sweeten the <a href="https://www.smartkarma.com/entities/credito-valtellinese-spa" target="_blank" data-smartkarma-citation="entities:21175:1" rel="noopener">Credito Valtellinese Sc (CVAL IM)</a> cash offer of €10.50 per share, and with CreVal shares trading at a 7% offer premium, there could be downside risk</li>
<li>We remain negative on Banco BPM shares, as, in the wake of the CredAg offer for CreVal, we believe that BPM’s options are limited, and that it may be the potential “back-stop” merger candidate with BMPS, in the event of no deal with Unicredit; the alternative could be a BPM-BPER merger, and we turn constructive on BPER, after its protracted underperformance</li>
<li>Risks to our view include Unicredit acquiring BMPS on worse than expected terms, with Intesa on the other hand delivering better than expected synergies and savings from the UBI integration; other risks also include a bidder emerging for BPM, as well as no merger or bid for BPER</li>
</ul>


The elephant in the Italian bank M&amp;A room is government controlled Banca Monte dei Paschi di Siena (BMPS IM), which needs to find a merger partner in 2021; will that be UniCredit SpA (UCG IM), post-Mustier, and who could be its new CEO?
We believe that, in the event of a Unicredit acquisition of BMPS, it would require meaningful “government sponsorship”; in effect, for BMPS, pre-deal, to dispose of the bulk of its NPLs – which is underway – and for a capital infusion that renders the deal to be capital neutral for Unicredit
The other big M&amp;A unknowns relate to the listed mid-cap banks especially Banco BPM SpA (BAMI IM) and BPER Banca S.p.A (BPE IM); these banks need to cut costs and branch networks, which can be more readily incorporated into a merger restructuring plan
We believe that the risk of a BMPS acquisition is largely priced into Unicredit shares, and we expect its wide PBV discount to premium valued Intesa Sanpaolo (ISP IM) to narrow;  our recommendation is to go long Unicredit, short Intesa
We think Credit Agricole Sa (ACA FP) is unlikely to sweeten the Credito Valtellinese Sc (CVAL IM) cash offer of €10.50 per share, and with CreVal shares trading at a 7% offer premium, there could be downside risk
We remain negative on Banco BPM shares, as, in the wake of the CredAg offer for CreVal, we believe that BPM’s options are limited, and that it may be the potential “back-stop” merger candidate with BMPS, in the event of no deal with Unicredit; the alternative could be a BPM-BPER merger, and we turn constructive on BPER, after its protracted underperformance
Risks to our view include Unicredit acquiring BMPS on worse than expected terms, with Intesa on the other hand delivering better than expected synergies and savings from the UBI integration; other risks also include a bidder emerging for BPM, as well as no merger or bid for BPER


Italian Banks M&A Scenarios: The Italian Job in 2021

Italy

Banca Monte dei Paschi di Siena S.p.A. is an Italian bank offering a comprehensive range of banking and financial services, including retail and corporate banking, wealth management, investment banking, and insurance products. It primarily serves individuals, families, small and medium-sized enterprises (SMEs), and corporations. The bank was founded in 1472 and is headquartered in Siena, Italy.

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Banca Monte dei Paschi di Siena (BMPS IM)

Intesa–MPS: One Bid Left, but No Carry

BPM has walked away, Rome will not interfere and Intesa’s offer now trades at parity. With MPS still opposing the price, the remaining upside rests...

Jesus Rodriguez Aguilar

Primer: Banca Monte dei Paschi di Siena (BMPS IM) - Aug 2026

Following a significant turnaround and a successful €2.5 billion capital increase in late 2022, BMPS has returned to robust profitability and...

αSK Primers

All Roads Lead to Siena: Intesa Moves on BMPS

Intesa’s opening bid for BMPS reshuffles Italian bank consolidation. With BMPS holding Mediobanca and BPM in the wings, outcomes hinge on price,...

Jesus Rodriguez Aguilar

Natixis (KN FP) - BPCE: European Bank Consolidation Rolls On

Even if this case is specific , BPCE's offer for Natixis shows that European bank consolidation continues, mainly on an intra-national level; we...

Victor Galliano

Italian Banks M&A Scenarios: The Italian Job in 2021

Italian banks M&A is gathering and we take a largely contrarian stance on stocks; pairs trade long Unicredit, short Intesa; positive on BPER,...

Victor Galliano

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