Mediobanca, 'Mps' offer is not rational and carries risks'

For shareholders, Mediobanca's 2028 plan has as its distinctive features the consolidation of the specialized bank model capable of generating high and sustainable growth and profitability with low execution risk as well as determining a strong generation of capital as a result of a capital light business mix.

"The exchange offer of Mps, on the contrary, for Mediobanca shareholders is devoid of industrial and financial rationale and is characterized by evidently high execution risks". This is stated in the note with updates to 2028.

In the new rejection of the Mps takeover bid, Mediobanca lists the following reasons. First, the fact that the aggregate reality has a profile of an undifferentiated medium-sized commercial bank, with high capital absorption, highly sensitive to the macroeconomic context, without strengthening in any of the segments of Mediobanca's activity and, conversely, the risks inherent in the Mps balance sheet remaining unchanged.

Second, the double-digit reduction in EPS, due to limited funding synergies, the presence of significant revenue dissynergies and the substantial absence of real cost synergies. Instead, the emergence of a significant retention cost linked to financial promoters and private & investment bankers is foreseeable.

Third, the difficulty of estimating sustainable Rote, Cet1 and therefore pay-out levels of the new entity due to the critical issues related to the maintenance of the franchise, the non-recurring components present in the MPS balance sheet (tax and legal risks), the high sensitivity to interest rates and credit risk especially for SMEs. The difficulty of using the DTAs in the amount and time assumed.

Fourth, the non-comparability of the shareholder remuneration policy which is at low execution risk in Mediobanca and high in Mps due to the aforementioned integration difficulties. Fifth, the strong discount implicit in the offer price compared to the intrinsic value of Mediobanca, its activities, as well as its growth and value creation prospects.