ISS advises Monte dei Paschi di Siena shareholders to reject its proposed purchases of Banco BPM and Banca Generali, while backing the Mediobanca merger. The October 29 vote also covers a €4 billion special dividend tied to the acquisition plan.
On October 29, Monte dei Paschi di Siena shareholders will decide whether to add two acquisitions to a merger already in progress. Institutional Shareholder Services recommends rejecting the bids for Banco BPM and Banca Generali, while supporting the merger of Mediobanca with MPS. The recommendation, reported by Italian news agency ANSA, separates the Mediobanca combination from the additional acquisitions proposed by MPS chief executive Luigi Lovaglio.
ISS also recommends voting against a proposed capital reduction and a €4 billion special dividend tied to the purchases. The payout would be made partly in cash and partly in Generali shares, according to Il Sole 24 Ore.
The concern is the plan's scale and timing. MPS would seek to nearly double in size while integrating Mediobanca, which it has already acquired. ISS says the information disclosed so far does not support the Banco BPM or Banca Generali proposals, even when each is assessed separately. It points to execution risks from combining banking groups with different corporate cultures and operating processes while the Mediobanca integration remains under way.
The deal materials also lacked completed due diligence. They gave no final price. Agreements with some shareholders were still missing.
The recommendations come amid a competing takeover offer from Intesa Sanpaolo. Intesa has bid for MPS and plans to sell half of its branches to address antitrust issues. ISS flagged concerns about Intesa's offer too, but still opposed the two purchases Lovaglio proposed as a defense strategy. His plan would expand MPS through Banco BPM and Banca Generali. Intesa's bid would acquire MPS and involve selling branches.
The dividend at MPS is tied to the proposed acquisitions. ISS recommends rejecting it alongside the bids, while the agenda also includes a proposal to reduce share capital. A separate case at Community Healthcare Trust involved a payout reduction, as covered in this dividend-cut report. Under the planned Mediobanca combination, MPS is due to receive Mediobanca's 13.3% stake in Generali.
Banco BPM holds 3.74% of MPS and was expected to determine its position on October 27. Extraordinary resolutions require a two-thirds majority. Intesa's bid has support from major investors including Delfin and Francesco Gaetano Caltagirone. Benetton also backs the offer.
ISS's recommendations are advice, not the result of the shareholder vote. MPS investors are due to decide on the proposed acquisitions and related corporate measures on October 29.
