ITALY Law and Practice Contributed by: Alessandro Corno, Luca Magrini, Pasquale Mosella and Rocco Pugliese, Alma LED
7.6 Acquiring Less Than 100% In a public takeover, if a bidder does not acquire 100% ownership, or at least a controlling stake of a target, it can negotiate with the remaining minority sharehold - ers a shareholders’ agreement where, among other things, it can secure for itself the right to appoint most of the board of directors and important executives as well as the right to veto certain reserved matters, such as approving the business plan, making capital investments, issuing new shares, or assuming new debt. These contractual rights give the bidder control over the company’s financial and strategic direction, even if it does not own the majority of the voting rights. However, care shall be taken as the entering into of a shareholders’ agreement may, per se, trigger the obligation to launch a takeover bid in certain circum - stances (eg, the agreement causes a de facto change of control, including as a result of the internal rules of the shareholders’ agreement dictating a change in the person exercising decisive influence in the sharehold - ers’ agreement and, as such, over the company, etc). For a bidder backed by PE to procure a “debt push- down” into the target, after a successful offer, a certain shareholding threshold is usually needed, although no such threshold is specifically set by the law. The debt push-down is usually not a simple procedure and may be subject to certain limitations. Usually, this is done by merging bidco/debtco/mergerco with the target company, which procures the target company taking on the bidco’s debt. Usually, the bidder can only merge if they have a significant stake in the share capital of target, usually more than 90% of the shares in order to make sure the merger goes through in accord - ance with a simplified procedure and to avoid legal challenges from minority shareholders. Shareholders not voting more than 5% of the shares cannot bring actions intended to obtain a court statement declaring the resolutions void (unless on the allegation that such resolutions are null, which, unlike voidable resolutions, under Italian law, occurs in limited cases). After a successful tender offer, the “squeeze-out” pro - cess is the main way to acquire the minority shares that have not been traded in the tender offer process and acquire 100% of the company. If the bidder has at least 95% of the voting share capital after making
the offer, the squeeze-out procedure can be started. If the bidder follows this procedure, they can force the acquisition of the other minority shareholders for the same price as the tender offer. The squeeze-out is mandatory and it is executed by a specific procedure supervised by CONSOB. The shares of the remaining shareholders are automatically transferred to the bid - der, and the consideration is paid into a bank account. Similarly, anyone who owns more than 90% of an Ital - ian company’s shares traded on a regulated market must buy the rest of the listed shares from any holders who so require, unless the 95% shareholder restores a sufficient free float within 90 days so as to ensure While mandatory tender offers are triggered by full- fledged share purchase agreements whereby the listed company’s main shareholders sell their shares to the purchaser/prospective offeror, thus crossing the thresholds set by the law, in Italy, it is also common for the main shareholders of the listed target com - pany to commit vis-à-vis the offeror to tender their shares and/or express their votes in P2P transactions in the context of a voluntary tender offer. These com - mitments are a key part of a PE bidder’s plan. They give the bidder a degree of confidence that their offer will be accepted and that they will be able to acquire a controlling stake, which makes it reasonable and justified to incur the costs of launching the takeover. Negotiations on these commitments usually occur early on in the process, even before the offer is launched public, where the PE bidder enters confi - dential discussions with the target company’s main shareholders (who are usually family groups or other institutional investors) to get their support for the ten - der offer. These kinds of commitments are usually legally binding and require the shareholder to accept the offer or vote for it. However, they would normally allow the committing shareholders an “out” if a bet - ter, competing offer is launched. This “out” is usually a “fiduciary out” clause. It lets the shareholder back out of their promise if a third party makes a better offer that the target’s board agrees is actually better. that regular trading can continue. 7.7 Irrevocable Commitments
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