Italy mulling hiking thresholds for mandatory takeover bids, sources say

Italy has 25% threshold for mandatory bids on large firms

PM Meloni seeks ways to reinforce Milan stock exchange

Recent government initiatives angered financial industry

By Giuseppe Fonte and Elvira Pollina

ROME, March 31 (Reuters) – Italy is considering raising the ownership thresholds that trigger mandatory takeover bids in public companies, three sources familiar with the matter told Reuters, as part of plans to spur the country’s underdeveloped capital market.

Since she took office in late 2022, Prime Minister Giorgia Meloni has adopted initiatives aimed at helping established shareholders keep a tight grip on companies, after the Milan stock exchange lost a string of prominent firms.

Asking not to be named due to the sensitivity of the matter, the sources said on Monday the government might change the two thresholds that trigger tender offers as it moves to reform Italy’s 27-year-old financial law.

Mandatory bids currently need to be launched by a shareholder whose stake rises above a 25% threshold in large companies, in the absence of another shareholder with a higher shareholding.

This 25% threshold is likely to be raised, though the move is not imminent, one of the sources said.

A second 30% threshold is in force for small and medium-sized enterprises. Italy classifies a company as an SME when its capitalisation is below 1 billion euros ($1.08 billion).

The government has said it aims to reform Italy’s financial law this year after consultation with various stakeholders and industry bodies.

Hiking the threshold for large firms would have significant implications for firms such as Telecom Italia (TIM), in which state-backed financial conglomerate Poste Italiane is set to become the No.1 investor with a 24.8% stake.

A higher threshold would let Poste buy additional TIM shares without making a buyout offer, strengthening its hold on TIM ahead of any M&A deal, another of the three sources said.

However, the main aim of Meloni’s government is to find ways to reinforce the role of the 200-year-old Borsa Italiana.

Marking a U-turn from decades of policies to simplify corporate takeovers, Meloni is now trying to encourage businessmen to list their firms in Milan without worrying about losing control to others.

Asset managers including large foreign funds, on the other hand, usually advocate rules preventing a concentration of power in the hands of a few.

Last year multiple representatives of Italy’s financial industry voiced concerns over a government measure that gave investors a bigger say over how companies’ outgoing boards present a list of candidates for the next term.

($1 = 0.9247 euros) (Editing by Gavin Jones and Jan Harvey)