Intesa denies it is working on an all-share bid for Generali

By Paola Arosio and Gianluca Semeraro MILAN (Reuters) - Intesa Sanpaolo denied on Thursday it was preparing an all-share offer for Assicurazioni Generali after shares in the Italian insurer rose in response to speculation that a bid was on its way. Italy's biggest retail bank said last week it was examining possible "industrial combinations" with Generali, the country's biggest insurance company, after sources said the bank was mulling a share offer to take a majority stake. "Intesa Sanpaolo categorically denies it is studying an all- paper bid for Generali," a spokesman for the bank told Reuters. It was not clear if the bank had decided to drop its interest in Generali completely or whether it was looking at different options. Intesa's chief executive, Carlo Messina, said last week he saw potential for growth by combining banks with insurers but added any such deal should not weaken the bank's capital strength or dividends. Generali, whose biggest investor is influential investment bank Mediobanca , has been at the centre of bid speculation involving insurers like Axa , Allianz and Zurich Insurance Group . Generali's share price rose strongly on Thursday with traders citing market talk an offer was on its way. One trader said Intesa was readying a cash and shares deal valuing Generali at 17 euros per share. Generali shares, which gained more than 5 percent in morning trade, ended the session up 1.77 percent at 14.94 euros. A European fund manager who owns shares in Intesa said he believed Intesa had not presented any credible rationale for a deal with Generali. "Defending the Italian-ness of Generali could be a political project but from an investor's point of view I am far from sure it creates value," the manager said, asking not to be named. Intesa shares ended down 0.9 percent. Earlier on Thursday, Intesa denied a possible bid for Generali was on the agenda of the bank's board meeting on Thursday and Friday, when directors are due to discuss and approve the 2016 results. "Intesa categorically denies the idea there could be an extraordinary board meeting over the weekend," a spokesman said. (Additional reporting by Giancarlo Navach, Danilo Masoni; Writing by Stephen Jewkes; Editing by Greg Mahlich and Jane Merriman)