ITALY Law and Practice Contributed by: Roberto Bonsignore, Paolo Rainelli, Gerolamo da Passano and Nicole B. Puppieni, Cleary Gottlieb Steen & Hamilton LLP
vided that the issuer can ensure the confidential - ity of the process. Furthermore, with respect to the conditions for a possible delay of the dis - closure of inside information, the amendments replace the generic reference to the absence of a misleading effect on the public with a require - ment that the disclosure must not contradict the latest information disclosed to the public, or any other type of communication by the issuer related to the same situation to which the inside information relates. 5.2 Market Practice on Timing Listed targets frequently opt to postpone the dis - closure of inside information regarding potential M&A transactions until the execution of binding agreements or the first public announcement by the bidder, as long as the conditions for defer - ral outlined in 5.1 Requirement to Disclose a Deal , including ensuring confidentiality, remain satisfied. 5.3 Scope of Due Diligence In the context of negotiated business combi - nations involving Italian listed companies, due diligence is typically limited compared to private transactions, for several reasons. Firstly, a sub - stantial amount of public information is already available on listed targets. Secondly, conduct - ing a broader and more extensive due diligence increases the risk of leaks. Therefore, due dili - gence is usually limited to a “confirmatory” exer- cise focusing on a short list of selected relevant items. This is carried out through access to a restricted data room and one or more Q&A ses - sions or presentations with the target’s senior management. 5.4 Standstills or Exclusivity Before engaging in discussions or negotiations with a potential bidder, the main shareholder(s) or the board of the target company typically
demand that the bidder agrees to standstill obligations concerning the target shares. These obligations are intended to prevent the bidder from making a hostile bid or engaging in share- building activities. Conversely, bidders often seek exclusivity undertakings from the major shareholder(s) with whom they are negotiating. Exclusivity or no- shop undertakings by the target itself are less common, primarily due to legal constraints on the target’s board. 5.5 Definitive Agreements Most Italian listed companies have one or more controlling shareholders. Therefore, bidders typi - cally negotiate the acquisition directly with these controlling shareholders rather than with the tar - get board before launching a bid. If negotiations prove successful, the bidder and the controlling shareholder(s) usually enter into: • a sale and purchase agreement for the controlling stake held by the controlling shareholder(s), in the case of a two-step transaction (private acquisition followed by a mandatory tender offer for the remaining target shares); or • undertakings by the selling shareholders to tender their shares in the case of a one-step transaction (voluntary tender offer for all of the target shares). Such agreements typically lack a detailed description of the terms and conditions of the tender offer, unless the transaction involves a rollover by the main shareholders of the target. In such cases, the co-investment/framework agreement between the bidder and the rollover investors is also likely to govern the mandatory or voluntary tender offer to be launched by the bidder.
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