ITALY Law and Practice Contributed by: Roberto Bonsignore, Paolo Rainelli, Gerolamo da Passano and Nicole Puppieni, Cleary Gottlieb Steen & Hamilton LLP
mandatory or voluntary tender offer to be launched by the bidder. As acquisitions are typically negotiated solely with the main shareholders of the target company, definitive agreements between the bidder and the target com - pany governing the bid are rare. However, the sce - nario may vary in negotiated transactions where the target company is directly involved as a party, such as in a merger. 6. Structuring 6.1 Length of Process for Acquisition/Sale The duration of the acquisition or sale process for an Italian private or listed company varies depending on several factors, such as: • the length of negotiations with the selling/major shareholder(s) of the target; • the time required to seek and obtain the regulatory approvals necessary to complete the transaction, such as merger control, the Foreign Subsidies Regulation (FSR), foreign direct investment (FDI) or sector-specific regulatory approvals; and • in the case of a public M&A deal involving a tender offer: (a) the time required to carry out the tender offer process, from the initial official announcement to the final settlement; and (b) the transaction structure chosen. Typically, a two-step transaction involving a private acquisition of control followed by a mandatory ten - der offer will take longer than a one-step transaction consisting of a voluntary tender offer only. On average, a private M&A deal or a one-step public M&A deal could take between three and six months, whereas a two-step public M&A deal could take between seven and nine months. 6.2 Mandatory Offer Threshold Following the entry into force of the Capital Markets Reform (see 3.2 Significant Changes to Takeover Law ), an MTO is triggered by the acquisition of vot - ing shares or voting rights in an Italian listed company that, when combined with the existing holdings of the
acquiring person (and any persons acting in concert with them), surpasses the following thresholds based on the total number of voting shares or voting rights in the listed company: • 30%; or • for shareholders already holding between 30% and 50%, any increase in their holding exceeding 10% over a rolling 12-month period (so called “incre - mental” MTO). In any event, the MTO will not be triggered if the above thresholds are exceeded due to a voluntary takeover bid for all the voting shares of the target company or in other exceptional circumstances (eg, another share - holder already possessing more than 50%, temporary threshold crossing, mergers approved by independent minorities, intragroup transactions, or recapitalisation of distressed companies). 6.3 Consideration Cash Versus Shares Cash tender offers are more prevalent than exchange offers in Italy due to several factors, as follows. • Exchange offers are legally more complex as they often involve a capital increase in kind by the bid - der, necessitating approval by the bidder’s share - holders. • If the shares offered in the exchange offer are not listed on an EU regulated market, certain obliga - tions arise, including: (a) if the exchange offer is an MTO, the bidder must also provide a cash alternative to target shareholders; and (b) if the exchange offer is voluntary, the bidder would not be exempt from the subsequent obligation to launch an MTO if it surpasses an MTO threshold during the voluntary offer. • Core shareholders of the bidder may resist dilution caused by new shares issued as consideration. Bridging the Value Gap Between Buyer and Seller Various tools are employed in private acquisitions to bridge value gaps between the parties, including:
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