Monte dei Paschi Calls Monday Board Meeting as Defense Against Intesa's €35 Billion Bid Crumbles

Banca Monte dei Paschi di Siena's board will meet late on Monday to take stock of Intesa Sanpaolo's sweetened €35 billion takeover bid, three people close to the matter told Reuters on Sunday — a meeting called as the investor coalition behind chief executive Luigi Lovaglio's defense plan falls apart.

An extraordinary board, an open agenda

The board will discuss the latest developments, one of the sources said, adding it was not clear if any further defence moves could be put to board members. Italy's Adnkronos wire independently confirmed an extraordinary board session for Monday, called to review Intesa's sweetened offer and the disclosures ahead of the October 29 shareholder meeting.

The 30% that broke with Lovaglio

What changed is the shareholder math. Intesa said a week ago it would increase by 25% the cash component of its €35 billion bid if MPS shareholders reject Lovaglio's defense plan — and since then, holders of roughly 30% of MPS capital have publicly broken with the chief executive.

The biggest defection is Delfin, the Del Vecchio family holding company and MPS's largest investor: it has committed to tendering its entire 17.6% stake — 534,676,825 shares — under Intesa's offer and to vote against Lovaglio's plan on October 29, Intesa disclosed. Then came the FGC group of Francesco Gaetano Caltagirone, holder of 10.26%, whose board unanimously voted to oppose all five extraordinary agenda items at the October 29 meeting. The Benetton family's Edizione holding (1.45%) had already backed Intesa's plans, and the Praude fund (0.72%) opposes the defense — together, the public commitments tally to roughly 30% of the bank's capital.

Two-thirds or nothing — and Intesa's walk-away right

That arithmetic is fatal to Lovaglio's plan. Italian takeover law sets the bar for his counter-moves at two-thirds of the votes actually cast on October 29. With nearly a third of the capital already committed against, the threshold is out of reach — and Intesa has made clear it will not wait around: the bank said it does not intend to waive its offer conditions and will claim their non-fulfilment if shareholders approve the defense.

Intesa's sweetener, unveiled October 3, raised the stakes directly: an extra €800 million in cash if shareholders reject the counter-plan, lifting the cash leg to €1.25 per MPS share — up from €1 — on top of 1.6 newly issued Intesa shares for each MPS share tendered.

The bid itself dates to June, when Intesa launched its offer of €1 in cash plus 1.6 new shares per MPS share — terms the Siena bank's board rejected, opening a battle that has since drawn in Italy's most powerful family investors and the government itself.

A defense under fire on two fronts

Lovaglio's defense rests on MPS launching its own takeover bids — for Banco BPM and Banca Generali — plus a related Mediobanca item, all on the October 29 agenda. But that plan is taking hits beyond the shareholder revolt: Crédit Agricole, which owns 29.3% of Banco BPM, said it will not tender its stake into MPS's offer, calling it not attractive enough. And Italy's Treasury, which holds 4.9% of MPS, will not participate in the vote at all.

The market has been repricing the odds for days. MPS shares traded around €10.81 on October 8 on indicative quotes, well below the 52-week high of €12.08, with a market value near €33 billion — a discount that itself reads as a verdict on the defense plan's chances.

What to watch Monday

What to watch: whether Lovaglio puts any new defense move to directors on Monday — Reuters' sources said that was unclear — and the still-awaited recommendations from proxy advisers ISS and Glass Lewis ahead of October 29. The two-thirds rule means abstentions and absences effectively help Intesa: every holder that stays home lowers the bar the opposition must clear.

Takeover defenses are built on the assumption that the target's owners prefer independence to a premium. When holders of nearly a third of the company have already said they'd rather take the premium, the defense isn't a strategy anymore — it's a schedule. Monday's board meeting is Lovaglio's chance to read that schedule out loud.