By Elena Vardon

The board of Italy's Mediobanca rejected Banca Monte dei Paschi di Siena's $14 billion takeover offer, saying it would destroy value for shareholders of both banks.

"The offer has not been agreed and is to be considered contrary to the interests of Mediobanca," the lender said in a statement Tuesday after its board met to discuss the unsolicited approach.

On Friday, state-backed Monte dei Paschi, or MPS, launched a surprise all-stock bid for Mediobanca as consolidation of the country's crowded banking market heats up and follows UniCredit's takeover offer for peer Banco BPM, which rebuffed the approach and is itself seeking to buy asset manager Anima.

MPS's offer valued its peer at 13.3 billion euros ($13.96 billion) as of Thursday's closing prices, which included a slight premium for its target, but this has since vanished as its shares have slumped while Mediobanca's have posted gains since the announcement.

MPS Chief Executive Luigi Lovaglio said a combined group could become a new national champion combining Mediobanca's investment-banking heft and wealth-management business with MPS's strength in retail banking to create a diversified financial institution which would be Italy's third-largest by assets.

However, Mediobanca's board said Tuesday that the offer was "strongly destructive" and lacked industrial and financial rationale. The deal would weaken its business model significantly, leading to the loss of revenue, clients and staff, while impacting its earnings profile and diluting its valuation, it said.

"The decline in the MPS stock market price following the offer announcement is proof of its fragility, making the deal highly unlikely to succeed," it said.

Mediobanca added that the presence of the same shareholders represents "a potential misalignment of interests" vis-a-vis other stakeholders. Influential billionaire families Del Vecchio--the heirs of the founder of eyewear maker EssilorLuxottica--and Caltagirone, the construction magnate, both own significant stakes in the banks and in insurer Generali, which counts Mediobanca as its largest shareholder.

The Milan-based bank said it remained focused executing its strategic plan which covers the four-year period to 2026.

MPS did not immediately reply to a request for comment.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

January 28, 2025 08:40 ET (13:40 GMT)

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