More Powers to the Government on M&A Deals Announced as a Response to the Italian COVID-19 Outbreak

The Italian Government, through its Cabinet Undersecretary Riccardo Fraccaro, announced that stricter measures – that will impact on the acquisitions of Italian targets -are ready to be enacted within days, as a countermeasure to the feared speculative attacks to Italian businesses operating in strategic sectors.

The measures will be introduced through a reform of the Italian Golden Power regulatory framework.

Effective since 2012 – and very recently amended to face new challenges relating to the introduction of 5G technology – the Italian Golden Power rules essentially provide the Italian Government with the power to impede certain acquisitions and extraordinary transactions to protect Italian’s interests in strategic industries, through a system based on prior mandatory notifications to the Italian Prime Minister’s Office.

The reform announced in the past few days aims at avoiding that, on account of the economic crisis brought by the COVID-19 emergency, speculations and hostile takeovers will harm Italian interests in strategic industries.

The stricter measures announced include:

  • The possibility to exercise the Golden Power also in relation to transactions within the European Union.
  • The introduction of new industries to be considered as strategic, for the purposes of the Golden Power regulatory framework.
  • The possibility for the Italian Government to autonomously intervene and exercise the Golden Power, regardless of any previous notification to the Authorities.

Details and wording of the announced reform are likely to be officially presented and enacted within days, if not hours, and updates will follow (both on our blog and website).

Only then, a first assessment on their potential impact on what is likely to be a troubled market will be possible.

For now, let us just hope that what has been defined by the Italian Cabinet Undersecretary as a “vaccine for the hostile takeover virus” will not cause severe side effects on the Italian M&A market.

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