ITALY Law and Practice Contributed by: Roberto Bonsignore, Paolo Rainelli, Gerolamo da Passano and Nicole B. Puppieni, Cleary Gottlieb Steen & Hamilton LLP
capital increases, mergers and demergers, and amendments to the by-laws). Delisting and Taking the Company Private • 90% + 1 of the voting shares allows the bidder to conduct “sell-out” procedure leading to delisting and possibly a subse - quent “squeeze-out” (see 6.10 Squeeze-Out Mechanisms ). • 95% of the voting shares allows the bidder to “squeeze-out” the remaining shareholders (see 6.10 Squeeze-Out Mechanisms ). Bidders often initiate the voluntary tender offer with a minimum acceptance condition but retain the right, with certain restrictions, to waive or reduce the threshold for such condition before the completion of the tender offer. 6.6 Requirement to Obtain Financing A tender offer cannot be contingent upon the bidder obtaining financing. The bidder must have all the necessary financing secured before the offer actually commences, with the following specifications: • at the announcement of the decision to launch a voluntary tender offer or when the event triggering a mandatory tender offer occurs, the bidder must ensure it will have all the funds required to complete the offer when the time comes; and • before the tender offer period begins, the bidder must obtain and provide to CONSOB a cash confirmation, typically in the form of a first demand bank guarantee, covering the total consideration for the tender offer. 6.7 Types of Deal Security Measures As most Italian listed companies are controlled by one or more shareholders, bidders typically negotiate the acquisition directly with, and seek
deal protection measures from, these control - ling shareholders, instead of the target’s board of directors, before launching a tender offer. From a deal protection standpoint, bidders often prefer a two-step transaction approach over a one- step transaction, as follows. • In a two-step transaction, the bidder first pri - vately acquires a controlling stake, followed by a mandatory tender offer for the remaining shares. This approach provides stronger deal protection because the sale and purchase agreement governing the private acquisition can fully bind the selling shareholder(s). • On the other hand, in a one-step transac - tion, the bidder conducts a voluntary tender offer for 100% of the target’s shares, often supported by commitments from the main shareholders to tender their shares. However, these commitments to tender are subject to statutory provisions that allow shareholders to withdraw from the tender offer (see 6.11 Irrevocable Commitments ), providing less certainty for the bidder. Deal protections granted by listed targets are rare. Listed targets typically only offer substan - tive undertakings, such as no-shop or exclusiv - ity agreements, in negotiated transactions where the target is directly involved, such as mergers. In the context of a tender offer, it is uncommon for listed targets to provide deal protections. Break fees or reimbursement arrangements for a bidder’s expenses in the case of an unsuccess - ful tender offer are also unusual. Implementing such measures may raise fiduciary duty issues for the target’s directors. 6.8 Additional Governance Rights A bidder aiming to establish control over a target listed company without pursuing 100% owner - ship or delisting would typically seek to attain an
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