By Elena Vardon

Banca Monte dei Paschi di Siena said it got authorization from the Italian government to go through with its takeover of peer Mediobanca as some of its top shareholders indicated that they would support the board in its bid.

The Italian lender launched a surprise $14 billion-takeover offer for its peer in January, with the aim to form a national diversified group by combining Mediobanca's investment-banking heft and wealth-management business with its strength in retail banking.

While it garnered support from the Italian state--which has long been looking for a partner to return the lender back to private ownership--Mediobanca's management rejected the unsolicited bid saying it would destroy value for shareholders of both banks.

MPS, which is known as the world's oldest bank, said on Monday the government decided not to exercise the so-called golden power, which allows it to block major decisions at companies of strategic importance to the country, effectively giving the deal the green light.

This follows the European Central Bank's authorization last Wednesday to issue new shares to fund the transaction, which shareholders are set to vote on Thursday at MPS's shareholders meeting.

Analysts were skeptical of the tie-up when the bid was first announced as they see execution risk as high. They have pointed to the banks' different business models and corporate cultures, challenges in achieving synergies and political overhang as reasons why the deal could be 9doomed from the start.

Ahead of the vote, proxy advisors have issued recommendations on how to vote on the board's proposed capital increase to fund the Mediobanca takeover bid.

ISS has recommended shareholders vote against it, saying that "it is difficult to foresee a seamless post-merger execution." Glass Lewis issued a positive view, acknowledging the identifiable risks but noting "these concerns are manageable with disciplined execution."

Some shareholders have already shared their voting intentions. Norges Bank Investment Management is planning to vote in favor of the proposal, according its website on Friday. Norway's wealth fund has a 2.95% stake in the Italian lender and is its sixth largest shareholder, according to LSEG Workspace data.

Some other MPS institutional shareholders with much smaller stakes--such as Canada's CPP Investments, Florida State Board of Administration, New York City Comptroller and Calvert--intend to vote against the transaction, according to their respective websites.

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

(END) Dow Jones Newswires

April 14, 2025 04:41 ET (08:41 GMT)

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