Intesa Sanpaolo has strengthened its €35 billion takeover bid for Monte dei Paschi di Siena after its largest shareholder Delfin agreed on Sunday to tender its 17.6 per cent stake, advancing the Italian bank's attempt to secure control of its rival.

According to Intesa, Delfin will tender all 534.7 million MPS shares it owns and vote at the bank's 29 October shareholder meeting in a manner consistent with the terms of the offer. The commitment gives Intesa significant support ahead of a vote that could determine whether MPS pursues its own alternative strategy.

Reuters reported that Intesa increased the cash component of its offer on Saturday by €800 million to €3 billion, a 25 per cent increase, after MPS chief executive Luigi Lovaglio proposed a defence plan involving alternative acquisitions. The sweetener represents an overall improvement of 2.3 per cent based on MPS's closing share price on Friday.

Intesa said it would withdraw its takeover offer if MPS shareholders approve Lovaglio's defence strategy at the 29 October meeting. The Italian takeover rules require shareholders to authorise any strategy intended to frustrate a bid, making the vote a key hurdle for MPS.

Lovaglio has urged MPS shareholders to approve his plan even if they intend to tender their shares to Intesa, arguing that maintaining an alternative would increase pressure on the bidder and could secure better terms. His strategy would involve MPS pursuing acquisitions of Banco BPM and Banca Generali rather than accepting Intesa's offer.

Intesa said Delfin has committed to opposing Lovaglio's strategy at the meeting, aligning the holding company's voting position with its decision to tender its entire MPS stake. Delfin is controlled by the Del Vecchio family, which is the controlling shareholder of eyewear group EssilorLuxottica.

The takeover offer covers up to 3.04 billion MPS shares, excluding the 1.02 million shares already held by Intesa, according to the bank. That number could increase by up to 272 million shares if MPS's planned merger with Mediobanca becomes effective before the offer period closes.

Intesa's bid is part of a wider consolidation of Italy's banking sector that has accelerated over the past two years. MPS, founded in 1472 and the world's oldest surviving bank, has been at the centre of the consolidation drive following years of financial difficulties and state intervention.

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