Mediobanca has launched a €6.3 billion (£5.4 billion) offer for wealth manager Banca Generali as the latest move in an escalating takeover battle rocking Italy's financial sector.

The Italian investment bank announced on Monday it would finance the deal by transferring its 13 per cent stake in insurer Generali, effectively transforming its decades-old relationship with the insurance giant from a financial investment to an industrial partnership.

"We've been accused, rightly or wrongly, of relying too much on Generali," Mediobanca chief executive officer Alberto Nagel told reporters. "This is a financially sound move that removes that issue."

The offer represents an 11 per cent premium to Banca Generali's last closing price, valuing each share at €54.17. The deal would double Mediobanca's wealth management revenue to 45 per cent of its total business.

"We're paying more than the stock's record high and more than analysts' price targets," Nagel said.

The move comes as Mediobanca itself is fighting off a hostile takeover bid from state-backed Monte dei Paschi di Siena (MPS). Mediobanca shareholders will vote on the Banca Generali offer on 16 June, with the MPS bid expected to begin weeks later.

"If our shareholders back this deal they will be choosing one project and I don't imagine they would then swap it for another," Nagel said.

The consolidation wave in Italian banking has intensified as lenders prepare for declining revenues due to falling interest rates. Hostile takeovers, usually rare in banking, have become commonplace in Italy's financial landscape.

The Banca Generali bid also marks the latest development in a years-long feud between Nagel and two major Generali shareholders: construction magnate Francesco Gaetano Caltagirone and Delfin, the investment vehicle of Italy's Del Vecchio family. Together, they own 17 per cent of Generali and 27 per cent of Mediobanca.

Last week, Mediobanca secured a significant victory at Generali by naming 10 out of 13 directors, including chief executive officer Philippe Donnet, despite Caltagirone receiving last-minute support from UniCredit, which has bought 6.7 per cent of Generali.

Mediobanca expects to complete the exchange offer by the end of October. If not enough Banca Generali investors accept the tender offer, Mediobanca plans to sell portions of its Generali stake on the market and use the proceeds to buy Banca Generali shares until it reaches a 66.7 per cent stake.

The market reacted with Banca Generali shares rising 5.2 per cent while Generali shares fell 1.1 per cent and Mediobanca shares dipped 0.8 per cent.

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