ITALY Trends and Developments Contributed by: Michele Massironi, Maria Giulia Furlanetto, Fabio Dalmasso and Riccardo Siligardi, La Scala S.t.a.p.a.
• the wave of consolidation within the Ital - ian banking sector, aimed at remedying its degree of fragmentation (for example, the proposed transactions that are heating the debate around UniCredit/BPM and MPS/ Mediobanca); • the confirmation of the interest rate cut strategy started in the second half of 2024 by the European Central Bank and the Federal Reserve, which will provide easier funding; • the positive forecast of growth of Italian’s GDP (around 1%) after the deceleration expe - rienced in 2023, which affected the trend of growth in 2024; and • the contemplated switch of investment strategy among Middle Eastern sovereign wealth funds to focus on domestic develop - ment instead of global, which will surely force Western investment entities to change their investment spectrum. Based on the end of 2024 and the early months of 2025, it is also reasonable to assume that the following sectors will be most involved M&A transactions in Italy in 2025: • life sciences; • energy and utilities; • technology (with specific reference to AI developments); and • financial services. 2024 court decisions and notarial doctrine Sale and purchase agreements and inconsistency in target company assets In Italy, one of the main disputed themes within case law interpretation is the applicability of the Italian Civil Code’s rules relating to warranty for defects in the sale and purchase of interests, with reference to Article 1490 (warranty for defects) and Article 1497 (lack of quality). The
majority of cases relate to the assets of the tar - get company: • not being consistent with the purchaser’s findings or the reference situation at the time of execution of the relevant agreement; • turning out not to be free from encumbranc - es; or • suffering hidden defects. Therefore, conflicts relate to consistency between the target company’s assets and its financial situation, or to the ways in which the purchaser could preserve its interest during the negotiations of a transaction of such kind gov - erned by Italian law. On this issue, two different directions have aris - en in Italian case law. According to the first direction, the direct sub - ject of the sale and purchase agreement is only the interest itself, which gives the purchaser the status of a shareholder. On the contrary, the tar - get company’s assets must be considered as an indirect subject of the transaction. Therefore, the existence of defects and lacks relating to the asset consistency of the target company may trigger the termination of the sale and purchase agreement (or a decrease in the consideration) only if such agreement contains respective and specific warranties issued by the seller (ie, rep - resentation and warranties). According to the opposing direction (confirmed by the Italian Supreme Court in decision no 22790, dated 12 September 2019), the target company’s assets should not be considered as an extraneous part of the subject of the sale and purchase agreement, regardless of whether or not the parties have agreed on specific transac - tional representations and warranties. The rea -
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