ITALY Law and Practice Contributed by: Roberto Bonsignore, Paolo Rainelli, Gerolamo da Passano and Nicole Puppieni, Cleary Gottlieb Steen & Hamilton LLP
• Recent rulings by the Italian Supreme Court ( Corte di Cassazione ) confirmed the enforceability in principle of put options entitling a shareholder who has invested in a company to sell its equity inter - est to another shareholder at a fixed strike price that allows the put option holder to recover its entire investment. This issue is particularly relevant for minority acquisitions and shareholders’ agree - ments, and had been the subject of debate in lower courts for several years. • The use of buyer-side warranty and indemnity (W&I) insurance policies in Italian M&A transactions has increased significantly, mainly but not only in transactions involving financial investors as sell - ers. There is also more frequent use of manage - ment warranty deeds signed by the target’s senior management when the seller is unable or unwilling to provide the buyer with the business representa - tions and warranties to be insured. • In 2025, a series of rulings by the Italian Supreme Court clarified the application of the abuse of law doctrine to merger leveraged buyouts (MLBOs). The Court confirmed that MLBO transactions are not inherently abusive, even when they produce significant tax advantages, provided that they are supported by valid non-tax business reasons. It also identified a number of relevant indica - tors, including an effective change of control, the existence of a broader corporate reorganisa - tion financed through external bank debt, and an overall assessment of the transaction’s economic substance based on the structure as a whole. 3.2 Significant Changes to Takeover Law On 27 March 2026, the Italian government approved Legislative Decree No 47/2026, introducing a com - prehensive reform of Italian capital markets regulation and the governance of Italian joint stock companies (the “Capital Markets Reform”). The Capital Markets Reform came into force on 29 April 2026, although certain provisions will take effect on later dates. The Capital Markets Reform includes significant changes to the Italian takeover regime, concerning the follow - ing, among others: • the thresholds triggering a mandatory tender offer (MTO);
• the reference period for determining the minimum price for the MTO; • the “squeeze-out” threshold; and • the introduction of a “put up or shut up” rule, simi - lar to the one provided by the UK Takeover Code, in the event of news or rumours regarding the potential launch of a bid. The Capital Markets Reform also introduces a “full buyout” mechanism as an alternative to the tradi - tional takeover bid regime, inspired by the scheme of arrangement typical of certain common law jurisdic - tions. Under this mechanism, a third party may acquire all the shares of a listed issuer for a consideration pay - able exclusively in cash, which may not be lower than: • the weighted average of the closing prices of the shares over the six months preceding the announcement of the buyout; and • any price paid by the buyer (or persons acting in concert with it) for purchases made within the same period. The acquisition is subject to approval by the extraor - dinary shareholders’ meeting, requiring the favourable vote of at least three quarters of the share capital rep - resented at the meeting, and of a simple majority of the attendees who are neither the bidder(s) nor any shareholder holding a relative or absolute majority stake exceeding 10% of the share capital. The pro - visions of the Capital Market Reform governing this new “full buyout” mechanism will enter into force only after CONSOB has adopted the relevant implementing regulations (to be adopted within 12 months from the entry into force of the Capital Markets Reform). 4. Stakebuilding 4.1 Principal Stakebuilding Strategies It is uncommon for a bidder to accumulate a stake in an Italian listed target prior to launching a tender offer as there are several hurdles to this (see 4.3 Hurdles to Stakebuilding ). The main strategies for building a stake involve acquir - ing shares in the market or utilising derivative instru - ments related to the listed shares, such as call options
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