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Italy saved Monte dei Paschi in Siena on Friday announced an all-stock takeover offer for 13.3 billion euros ($13.95 billion) for a larger domestic partner Mediabanca.
At 09:43 London time, Monte dei Paschi (MPS) shares are down 5.74% and Mediobanca are up 6.28%.
Offering 23 of its shares for 10 takeover targets, Monte dei Paschi values Mediobanca's shares at approximately €15,992 each, representing a 5% premium to the January 23 closing price.
According to FactSet data, Monte dei Paschi's equity was worth 8.7 billion euros at the close on January 23, while Mediobanca's market capitalization was 12.3 billion euros.
CNBC has reached out to Mediobanca for comment.
Monte dei Paschi, the world's oldest bank, needed state aid in 2017 after years of crippling losses, but under the leadership UniCredit veteran Luigi Lovaglio. The Italian government retains an 11.73% stake in the lender.
“The transaction can contribute to complementing the dynamics of the Italian financial system in a context of strong consolidation,” Italian banking union Fabi said after announcing the offer, according to a CNBC translation. “MPS, historically at the center of complex events, is now moving in an ambitious direction. The offer confirms, among other things, that MPS has made a full recovery.”
Friday's offer deepens the picture of growing appetite for mergers and acquisitions in Italy's banking and financial services sector, where the country's second-largest bank UniCredit has previously offered a buyout BPM Bankwhich in turn seeks to take over the fund manager Anima Holding. Monte dei Paschi itself was a potential takeover target for UniCredit until talks recently broke down in 2021.
— CNBC's Silvia Amaro and Ganesh Rao contributed to this report.
This breaking news is being updated.