Intesa puts 10.091 euros on each Monte dei Paschi share and 1.0 euro of it is cash

The currency of the offer

Intesa Sanpaolo is offering 16 of its own new shares and 1.0 euro in cash for every 10 Monte dei Paschi shares. At the reference prices that comes to 10.091 euros a share, about 12.5 per cent above the 5 June close, and maximum consideration of 30.6 billion euros. The cash line is the smallest number in that sentence; the rest is Intesa stock that has not been issued yet.^[1]

That is why the file runs through a shareholder meeting rather than a financing package: Intesa's shareholders meet on 10 September to approve the capital increase that would create those shares. Writing in July about EQT's raised bid for Perpetual, I argued that a deal's economics can live in its conditions as much as in its headline price. Here there are three conditions: the vote, an acceptance threshold of 66.67 per cent that Intesa may waive, and a binding disposal.^{[1], [2]}

What the branch sale does to the price

Under a binding agreement Unipol takes a standalone bank built from about 635 Monte dei Paschi branches, the brand and most of the central functions, for an estimated 3.0 to 3.5 billion euros. Those proceeds arrive in the same currency and on roughly the same timetable as the cash leg of the offer.^[1]

What stays with Intesa is about 625 branches and Mediobanca, and that is the asset the 30.6 billion euro headline has to be tested against. A synergy case built on the 635 branches contracted to leave cannot be counted twice, because half of the acquired network changes hands on day one.^[1]

The stake that says it will not steer

The Ministry of Economy still holds 4.8 per cent of Monte dei Paschi. Federico Freni said at Cernobbio that the stake would be sold when the state can obtain the best conditions, without giving a date, and added that the government will not decide which offer wins and that only one of the two can succeed. For a shareholder pricing the two proposals, an undated 4.8 per cent held by a holder that has declared itself neutral is a supply overhang with no schedule attached.^[1]

If the meeting on 10 September approves the capital increase, the number to watch is where acceptances stand against the 66.67 per cent threshold. A result below it, and whether Intesa then waives the condition, would show what it is prepared to own without full control.^[1]