Intesa, Italy's leading bank, makes a surprise $35 billion offer to acquire Monte dei Paschi.

Intesa's proposed acquisition of Monte dei Paschi would create a banking giant with a €126 billion market value, second only to Santander in the eurozone. The merged entity would be formed through a surprise $35 billion offer from Intesa.

Intesa Sanpaolo, Italy's largest banking group, unveiled an unexpected €30.6 billion ($35 billion) cash-and-share offer to acquire rival lender Monte dei Paschi di Siena on Monday, sparking a new wave of consolidation in the sector.

Intesa's dominance in Italy's banking sector was solidified after acquiring UBI five years ago, but it opted to sidestep the recent merger frenzy, citing regulatory constraints that restricted its ability to expand domestically beyond a certain point last year.

Intesa has reached an agreement with Unipol, Italy's leading insurer, to acquire a significant stake in BPER Banca, contingent on the success of its surprise $35 billion offer for Monte dei Paschi, which involves 635 branches and the MPS brand.

Intesa and Unipol had previously collaborated on the UBI acquisition project.

Intesa's proposed acquisition would catapult the merged entity into second place among euro zone banking groups by market value, surpassing Santander's dominance, with an estimated capitalization of €126 billion and a target net income of €16 billion in 2029, exceeding last year's combined profits of €13.6 billion.

Monte dei Paschi, previously rescued by the state in 2017 and privatized again between 2023-2024, has become a key player in Italy's banking sector consolidation efforts following its acquisition of Mediobanca last year.

Intesa's move catapulted it into the top investment position for insurer Generali (GASI.MI), a prized asset in Italy's financial landscape.

Intesa's focus lies in wealth management and insurance, having previously considered acquiring Generali in 2017 before opting for organic growth instead of purchasing it outright.

UniCredit, Italy's second-largest bank, established a significant investment in Generali through a substantial acquisition last year.

Intesa's surprise bid to acquire Monte dei Paschi involves a 12.5% premium over the bank's closing share price on Friday, amounting to a total expenditure of €30.6 billion against its market value of €27.4 billion.

In a shocking turn of events on Sunday, as speculation surrounding Intesa's intentions reached a fever pitch, Banco BPM revealed that its board had given unanimous approval to initiate discussions with Monte dei Paschi about a possible merger of equals, combining their operations.

Intesa Sanpaolo, Italy's largest(ISP.MI)group, unveiled an unexpected €30.6 billion ($35 billion) cash-and-share offer to acquire rival lender Monte dei Paschi di Siena on Monday,sparking a new wave of consolidation in the sector.

UniCredit, Italy's second-largest bank,established a significant investment in Generali through a substantial acquisition last year.