Milan (Reuters) – The Italian Bank Mediobanca rejected Tuesday an offer of redemption from its rival Monte Dei Paschi Di Siena, believing that a rapprochement would be detrimental to its shareholders because of the absence of strategic and financial logic.

Monte Dei Paschi (MPS) launched a surprise buy -off offer on Friday of 13.3 billion euros on Mediobanca, but the value of its supply in securities has decreased due to the drop in its stock market caused by the skepticism of investors with regard to the planned combination.

MPS action was down on Tuesday 1.3% to 12:53 p.m. GMT, after losing 2% on Monday and 7% on Friday. Based on the proposed exchange ratio, this indicates a value of 14.46 euros for each action MEIDOBANCA, which was exchanged Tuesday at 16.07 euros.

“The Board of Directors considered that the offer is without industrial and financial justification and that it is therefore destructive for Mediobanca,” the Italian bank said in a statement on Tuesday.

MEIDOBANCA said in the press release that the offer would weaken its business model by diverting customers and bankers from its investment and wealth management activities.

MPS, saved from bankruptcy by the Italian State in 2017, is associated with Mediobanca in consumer credit. For his part, Mediobanca draws more than a third of his income from his participation in the insurer Generali and has bet on the management of wealth to supplement his investment banking activities.

The bank also indicated that the operation was characterized by the important cross -participations of Delfin, the company Holding of the late Leonardo Del Vecchio, and Francesco Gaetano Caltagirone, in MPS, Mediobanca and Generali.

“The presence of the same shareholders in MPS, MediBanca and Assicurazioni generali, and in the context of an offer relating to all actions, represents a potential misalignment of interests compared to other shareholders,” said the group in the press release.

The Board of Directors, which will only give shareholders’ official opinion when the offer of the offer will be made public in a few months, also said that the rapprochement would harm the future profits of Miodobanca, since the drop in rates of ‘interest should weigh more on MPS.

This rejection was expected while the managing director of Mediobanca, Alberto Nagel, had informed in a letter to the employees that the offer had not been the subject of a prior agreement.

The operation, however, received the green light from the Italian government which wishes to emerge a third powerful banking force to compete with Intetesa Sanpaolo and Unicredit.

(Written by Gianluca Semeraro, Valentina Za, Keith Weir, Bertrand de Meyer, edited by Blandine Hénault)

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