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The world’s oldest bank is two weeks from a vote that will determine whether it remains an independent force in Italian finance or becomes a division of Intesa Sanpaolo. Monte dei Paschi said Monday that Intesa Sanpaolo’s sweetened takeover offer leaves MPS investors exposed to several uncertainties, while forcing them to ditch a possible alternative plan. The board’s statement arrived after an extraordinary meeting called specifically to assess the situation. Its conclusion was exactly what CEO Luigi Lovaglio needed: not yet.

The Structure of the Choice

Intesa is now offering €1.25 in cash for each MPS share, up from €1 previously, plus 1.6 new Intesa Sanpaolo shares. The additional €800 million cash component is conditional on Paschi shareholders rejecting the two transactions proposed by CEO Luigi Lovaglio. Those two transactions are exchange offers for Banco BPM and Banca Generali, proposed in August as a defence. Among other items, shareholders will vote on the exchange offers for Banco BPM and Banca Generali and on a €4 billion extraordinary dividend. Approval of even one of these proposals would cause Intesa’s offer to lapse.

That is the binary: reject Lovaglio’s plan and collect the sweetened Intesa bid; approve it and Intesa walks. Monte dei Paschi said Intesa was asking its shareholders to abandon the alternative plan without any certainty that the proposed merger would go ahead as expected. That uncertainty is the board’s strongest remaining argument, but it is getting harder to make.

The Bear Case for Lovaglio’s Plan

The shareholder math has shifted decisively. Delfin, the holding company for Italy’s Del Vecchio family, has committed to tendering its 17.6% stake in Paschi into Intesa’s offer. Delfin also said it would vote against MPS CEO Luigi Lovaglio’s alternative strategy at the shareholder meeting on October 29.

Italy’s Banca Monte dei Paschi was dealt fresh blows on Thursday to its takeover bids for Banco BPM and Banca Generali, after key shareholder Caltagirone opposed both deals and Credit Agricole said it would not tender its Banco shares. Credit Agricole CEO Olivier Gavalda said separately that the French bank would not tender its 29.3% stake in Banco BPM into MPS’ takeover offer, dismissing it as “not attractive enough.” Without Credit Agricole, the Banco BPM offer is effectively blocked before MPS shareholders even vote on it.

The Credit Agricole refusal is a reminder of how concentrated ownership shapes outcomes in European banking consolidation. The broader question of whether European banks have become investable again as a group sits directly behind every blocking stake and every bid premium in this sector.

Caltagirone, with a 10.26% stake, has announced that it will vote against the resolutions on Lovaglio’s plan, while Delfin, with 17.6%, has backed Intesa’s offer. Together with the Benetton family vehicle Edizione and other declared opponents, the opposition bloc can make it very difficult to secure the two-thirds majority of the capital represented at the meeting that is required for the plan.

What the MPS Board Is Actually Arguing

Even after Intesa Sanpaolo’s relaunch, the premium offered for Monte dei Paschi remains lower than the average premium observed in comparable voluntary public offerings in the Italian banking sector. The board also said the proposal would still leave shareholders exposed to Intesa’s performance, since the consideration is mostly shares. Both points are technically correct. Neither changes the arithmetic of October 29.

What Investors Are Missing

The market also continues to speculate about UniCredit’s next moves: its Commerzbank bid remains in play, while reports concerning Banca Generali have not received official confirmation. If Intesa’s offer lapses because the MPS plan somehow passes, Banca Generali becomes an unanchored asset in a sector with several motivated buyers. That second-order consequence is getting little attention relative to the headline vote.

The other underappreciated element is Lovaglio’s own position. Faced with this situation, Lovaglio could have decided to withdraw the extraordinary proposals, given the opposition of the main shareholders. He has not. Proceeding to a vote his own shareholder base will likely reject is either a negotiating posture or a last stand. Event-driven desks are pricing it as the latter.

Stocks to Watch

• Monte dei Paschi (BMPS): The direct subject. The stock has been trading above Intesa’s original June offer as the market prices in the sweetener and the near-certainty that Lovaglio’s plan fails. The gap between current price and the improved offer’s value is the trade event funds are running.
• Intesa Sanpaolo (ISP): Intesa’s bid, if completed, would create one of Europe’s biggest listed banks. Intesa shares carry execution risk if regulators impose conditions.
• Banco BPM (BAMI): MPS’s exchange offer for BPM appears stalled regardless of October 29 after Credit Agricole, its largest shareholder, ruled out tendering its stake. BPM’s strategic future is now fully open.
• Banca Generali: The least-discussed name in this situation. If MPS’s defence collapses and Intesa absorbs MPS, Banca Generali’s M&A status resets. Watch for positioning to build ahead of October 29.