ISS to Mediobanca shareholders: vote in favour of the merger with MPS

The first verdict is in. The proxy adviser Iss has recommended that shareholders of Mediobanca to vote in favour of the merger with MPS, as part of the plan for integration plan between the two companies devised by Monte’s CEO, Luigi Lovaglio. This endorsement highlights the industrial value of that integration project between Siena and Piazzetta Cuccia, and does not, however, address the merits of the public exchange offers (OPs) launched by MPS on Banca Generali and BancoBpm.

The merger, writes ISS, “appears to be underpinned by sound strategic logic and, on the whole, deserves to be supported, even if the valuation” of Mediobanca shares “does not appear particularly attractive, despite the context provided by Intesa’s bid” for MPS. According to the proxy, the merger would represent “a step towards the full realisation of synergies” and “would eliminate the implicit conflict between the controlling shareholder and the minority shareholders, who would become part of a larger, uncontrolled entity with more liquid share capital”.

ISS points out that the merger was approved by the boards of Mediobanca and MPS prior to Intesa’s public takeover bid and that its assessment must be made ‘against the backdrop of that bid’. In this regard, the proxy statement points out that Intesa has urged MPS shareholders not to approve the merger, ‘arguing, amongst other things, that the merger could be carried out more efficiently following the completion of its own bid, thereby reducing the risks associated with IT integration, operations and potential duplication of costs’. ‘Nevertheless,’ ISS points out, ‘the proposed merger does not, in itself, appear to jeopardise Intesa’s offer’, as Intesa has not made the continuation of the public takeover bid for MPS conditional upon its rejection.