Key Takeaways:
Banco BPM's withdrawal from merger talks with Monte dei Paschi hands Intesa Sanpaolo a clearer runway for its €35 billion takeover of the Tuscany-based lender.
Banco BPM abandoned merger talks with Banca Monte dei Paschi di Siena on Friday after its largest shareholder, Credit Agricole, rejected the tie-up — clearing the way for Intesa Sanpaolo's unsolicited €35 billion takeover bid for the state-rescued lender.
"Nothing can be done against us or without us," Jerome Grivet, deputy chief executive at Credit Agricole, said on a call Friday. The French bank, which raised its stake to about 29 percent of BPM in July, sees no value in a combination of the two mid-sized Italian lenders and prefers merging its own Italian unit with BPM instead.
BPM's board halted discussions because no definitive progress had been made since it first sought talks in June, the Milan-based lender said. Monte dei Paschi agreed to end preliminary consultations and said it would continue to assess all strategic options in the interest of shareholders, employees and clients. Credit Agricole CEO Olivier Gavalda earlier Friday dismissed Italian media reports of an imminent BPM-Paschi deal as "completely false."
The collapse of the BPM-Paschi merger leaves Intesa's €35 billion offer — which includes a €3 billion cash component — as the dominant option for Monte dei Paschi, which has called the bid insufficient without formally rejecting it. Intesa holds a shareholder meeting Sept. 10 to approve the capital increase needed to fund the deal, and Italy plans to sell its remaining 4.9 percent stake in Monte dei Paschi by the end of September, La Stampa reported.
The failed tie-up caps a two-year scramble for Italy's mid-sized banks as the sector consolidates around Intesa and UniCredit. The government, which rescued Monte dei Paschi in 2017, had promoted a BPM merger to create a third large player — a push that prompted UniCredit to launch a bid for BPM in late 2024 that later failed. UniCredit CEO Andrea Orcel has since shifted focus to a hostile takeover of Germany's Commerzbank, leaving Intesa to move on Monte dei Paschi.
Intesa, which holds a one-fifth market share in Italian banking, had steered clear of the first wave of consolidation that culminated last year in Monte dei Paschi buying merchant bank Mediobanca and becoming the main investor in insurer Generali. Hours before Intesa announced its bid in June, BPM issued its own merger invitation — what Intesa CEO Carlo Messina dismissed as "a love letter" rather than a concrete proposal.
Credit Agricole's veto effectively decides BPM's fate. The French lender has cultivated a long-standing presence in Italian banking and strengthened its shareholding as smaller lenders became targets for larger Italian banks. Its preferred scenario — a merger between BPM and Credit Agricole Italia — would create a combined entity with a stronger foothold in Italy's retail and corporate banking markets.
Monte dei Paschi CEO Luigi Lovaglio now weighs whether to accept Intesa's offer or hold out for a better price. A person with knowledge of the bank's defense strategy said it would pursue an alternative only if it created more value for shareholders, with the €3 billion cash component in Intesa's bid setting the benchmark. Finance Minister Giancarlo Giorgetti has reiterated the government remains "neutral" in the process, though its planned stake sale by September removes a key overhang before Intesa's shareholder vote.
This article is for informational purposes only and does not constitute investment advice.
