Mediobanca shares plummet, MPS merger chance fades as Intesa raises offer

** Shares in Italy's Mediobanca MDBI.MI are down 7.7% - the worst performer on Italy's blue-chip index - after Intesa Sanpaolo ISP.MI raised its takeover offer for Monte dei Paschi di Siena BMPS.MI, making a merger with MPS less likely

** MPS shareholders will vote on CEO Lovaglio's defense plan on October 29, which involves merging Mediobanca and launching joint takeover bids for Banca Generali BGN.MI and Banco BPM BAMI.MI

** Intesa said on Saturday it would pay MPS shareholders a further €800 million ($895.84 million) if they were to reject the plan, while adding on Sunday that MPS's largest shareholder Delfin has committed to tendering its stake to its offer

** Italy's largest bank also added it would withdraw its bid if MPS shareholders approved the plan

** A Milan-based trader says an Intesa takeover would make a Mediobanca delisting "less likely" - in contrast with the initial pledge from MPS's CEO Luigi Lovaglio

** "In our view, voting in favour of the relevant proposals does not create additional optionality for BMPS shareholders," says Equita brokerage

** Intesa and MPS shares both trade up around 0.8%

($1 = 0.8930 euros)