What happened?
Mediobanca has made an offer to buy Banca Generali for EUR6.3bn. Mediobanca is proposing to fund the offer through Generali shares it already owns. The offer is 1.7 Assicurazioni Generali shares for each Banca Generali share. Based on Friday''s closing prices, this offer equates to an 11% premium.
BNPP Exane View - Generali perspective:
A long-hypothesised deal: This proposal is another one that has long been hypothesised by investors. The timing is likely a reflection of the ongoing governance and shareholder wrangling in the Italian financial space. As such, the deal cannot be considered purely from a financial and strategic perspective. We must also consider the implications for all the various cross-holdings.
Operational and financial sense: A deal would appear to make operational and financial sense in our view. Generali owns 50.2% of Banca Generali and it is a relatively small contributor to the group. Based on consensus earnings, Generali''s share of Banca Generali earnings are cEUR200m, equivalent to less than 5% of group net income. The Asset Management and Wealth Management segments are also only expected to contribute ~1% of the target EPS cagr across the 2024 - 2027 plan. Operationally, Banca Generali distributes Genertel Life products. This is c20% of the Italian Life new business, albeit these products are lower margin than the total Italian Life business. We note previous comments that state any corporate action with Banca Generali would require that this distribution agreement is maintained.
Shareholders, Governance and Monte de Paschi: The real intrigue from this proposal relates to what it may means from a governance and shareholder perspective. MedioBanca''s ownership of 13% of Generali has effectively meant that it has had the ''casting vote'' at recent AGMs. This was demonstrated last week when MedioBanca''s proposed Board Slate won 52.38% of the vote, vs the Board Slate of Mr Caltagirone, which received 36.85%.
...
