Italy's third-largest and the world's oldest bank, Monte dei Paschi di Siena (MPS), on Friday launched two defensive share swaps with Italy's fourth biggest bank Banco BPM and with the wealth manager of Italy's top insurer Generali, Banca Generali to try to fend off a 30.6 billion unsolicited takeover bid by Italy's biggest bank Intesa Sanpaolo, the Tuscan bank said.

    MPS said the 34 billion operation would create a new national champions while CEO Luigi Lovaglio said it would be among the top 10 in Europe, promising that the swaps wold be friendly.MPS said the offer for Banco BPM will be worth approximately €25.3 billion, and the offer for Banca Generali will be approximately €8.72 billion.
    The plan developed by MPS to counter Intesa's takeover bid also includes the "distribution of €4 billion to MPS shareholders," to be paid "partly in cash," amounting to €1 billion, "and partly in Generali shares," amounting to €3 billion.
    This sum corresponds to "approximately 4.5% of the share capital" of the Italian giant "at current market prices." The transactions with Banco BPM and Banca Generali will generate pre-tax synergies of approximately €2.6 billion annually, of which approximately €0.8 billion from the integration of Mediobanca, Italy's premier merchant bank which MPS took over earlier this year.
    Lovaglio said the op would create a €80 billion group, among the top ten European banks, and would be the second-largest Italian group, of European relevance, and ready to compete.
    The combined group of MPS, Banco BPM, and Banca Generali, he told analysts in a conference call, "would have a pro forma market capitalization of approximately €80 billion, placing it among the top ten European banks and second in Italy in terms of customer loans and branch network.
    "We are therefore creating a stronger Italian group, of European relevance, rooted in the national economy, and ready to compete in a constantly evolving sector." He added that he was "convinced" that the two merger bids would proceed amicably.
    "I am deeply convinced that the characteristics of this project will allow this transaction to proceed amicably because it creates enormous value," he told the analysts.
    He said that he has not yet had "any contact with the shareholders" of Banco BPM and Banca Generali, but expressed confidence that "one of the most important projects in the banking sector in recent years" will be appreciated.
    "I spoke of a friendly, not hostile, merger," he added, because "we are convinced of the strength of this project."
   

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