Corporate M&A 2021

Last Updated April 20, 2021


Law and Practice


Nunziante Magrone Studio Legale Associato is an independent multidisciplinary Italian law firm. Thanks to the specific expertise of its professionals, the firm is able to assist its clients in all major areas of business law through its departments. Nunziante Magrone has more than 80 lawyers with offices in Milan, Rome and Bologna. Nunziante Magrone has a strong international practice and is consistently listed for its members’ expertise.

The Italian M&A market had a very complex 2020, and the COVID-19 pandemic had a significant impact. The health emergency situation has slowed down operations, causing a contraction both in terms of the number of reported operations carried out (830 in 2020 against 1,085 in 2019), and in terms of reported total value (EUR34.5 billion in 2020 against EUR52.4 billion in 2019).

According to economists, Italian domestic transactions recorded strong growth in terms of turnover, with a total of around EUR16 billion (up 18% compared to EUR13 billion in 2019), despite a reduction of around 16% in the number of transactions: 480 in 2020 (compared to 571 in 2019). Many important transactions belong to the financial services sector, such as the acquisition of UBI Banca by Intesa Sanpaolo, for a value of approximately EUR4 billion and the entry of Assicurazioni Generali into Cattolica (EUR300 million for 24.5% of the share capital. There were also interesting ideas in other sectors such as publishing, energy, and food.

The extraordinary financial activity of Italian companies abroad is confirmed at the previous year's levels: over EUR13 billion of total investment, albeit concentrated in a smaller number of transactions (134 in 2020, compared to 197 in 2019).

In the past 12 months, the banking and finance, energy, food, biotech, pharmaceutical and publishing sectors have experienced the most M&A activity. In contrast, the COVID-19 pandemic has negatively affected primarily restaurants, tourism and the art (ie, theatres, cinemas, etc) because of the lockdown measures. 

The means of acquisition of listed companies typically involve a takeover bid, with cash tender offer or, in whole or in part, other considerations such as securities. Takeover bids may be divided into mandatory, and voluntary takeovers. Alternative means of acquisition of both listed and unlisted companies involve direct or reverse merger with the target company.

The means of acquisition of unlisted companies typically involve private negotiations between the parties and the consideration is paid in cash. Several guaranties may be provided upon completion of the transaction depending on the specific needs of the parties involved.

It is also possible for the seller to make a contribution to the activities of interest to the purchaser, to a special-purpose corporate vehicle (SPV) and with the subsequent transfer to the purchaser of the participations in the same SPV.

The consideration mostly used in the transactions is cash, while share deals are rare.

The primary regulators for M&A activity in Italy are:

  • the Bank of Italy, which supervises the activities of banks and financial intermediaries;
  • the National Commission for Companies and the Stock Exchange (CONSOB), which supervises all listed company and the market generally;
  • the Italian Antitrust Authority (Autorità Garante della Concorrenza e del Mercato or AGCM”);
  • the Italian Insurance Regulatory Authority (Istituto per la Vigilanza sulle Assicurazioni or IVASS);
  • the Italian Electronic Communications and Media Authority (Autorità per le Garanzie nelle Comunicazioni or AGCOM) in relation to the media and telecommunications industry; and
  • the European Central Bank (BCE). 

The "Golden Power" Regime

Among the recent measures put in place by the Italian government to fight the negative effects of the COVID-19 pandemic is Decree-Law No 23/2020 (the “Liquidity Decree”), which has extended the scope of application of the “Golden Power” regime, a system of special intervention powers of the Italian State already provided for by Decree Law No 21/2012 (the “Golden Power Decree”), the purpose of which is to safeguard strategic sectors of national interest.

The Golden Power regime has gone beyond the former principle of "privileged participation" which assigned the State a "golden share" with special prerogatives and rights (such as influencing the decisions of the companies concerned) and set a new system according to which the State receives certain "Golden Powers" exercisable in the event of extraordinary transactions involving companies operating in national strategic sectors.

The areas of application of the Golden Power regime, as amended by the Liquidity Decree, are defence, national security, energy, transport, communication, and have been gradually expanded with subsequent measures, to include the telecommunications sector and the 5G technology.

See 3.1 Significant Court Decisions or Legal Developments for further information.

Regulatory Shield

In relation to these sectors, a regulatory “shield” has been introduced according to which the Italian government has, inter alia, the right to:

  • dictate specific conditions to guarantee the protection of the essential interests of the State;
  • veto the adoption of corporate resolutions, mainly concerning:
    1. the modification of statutory clauses relating to the transfer of the headquarters or the corporate purpose (oggetto sociale) abroad;
    2. mergers;
    3. demergers; and
    4. dissolution or sales of the company, branches of company, subsidiaries, rights of enjoying or use of tangible and intangible assets, as well as the assumption of constraints that condition their use; and
  • oppose the purchase of investments by a subject different from the Italian State or by subjects controlled by the latter, which lead the buyer to exercise, directly or indirectly, also through subsequent acquisitions, through a third party or through related subjects, voting rights that could compromise the interests of defence and national security.

Under Italian Antitrust Law enacted by Law No 287/1990, as amended, all mergers and acquisitions involving undertakings with aggregate turnover in Italy exceeding EUR504 million and when the aggregate domestic turnover of each of at least two of the undertakings concerned exceeds EUR31 million, must be previously notified to and authorised by the Italian Antitrust Authority (Autorità Garante della Concorrenza e del Mercato or AGCM). These are the thresholds published on 23 March 2020 and they are adjusted annually. Both thresholds need to be met to trigger the need for any notification.

In cases where the operation results in a change of the employer for the employees working in the relevant business, the acquirer of a business should take account of the labour law regulations applicable to the transfer of business or going concern. In the case of companies employing more than 15 employees, a prior trade union consultation procedure should be carried out. This is not applicable when the transaction involves the sale of shareholdings, as there will be no change in the employer, unless otherwise provided for by collective bargaining agreements in certain sectors.

The legislation applicable in the period after the operation has been completed to be taken into consideration is the following:

  • dismissals (which will vary also according to the date of hiring and the number of employees);
  • health and safety at the workplace, including, without limitation, compliance with the anti-COVID-19 protocols;
  • part-time work and remote work;
  • fixed term employment contracts; and
  • compliance with compulsory hiring of disabled employees.

The provisions laid down by collective bargaining agreements at a national and company level should also be taken into consideration, as governing a large part of the employment relationship, including, without limitation, minimum salaries and job levels. 

Under the Golden Power regime, the following acquisitions must be notified to the Prime Minister’s Office (Presidenza del Consiglio dei Ministri) by the purchaser, within ten days, together with any information useful for the general description of the acquisition project in relevant sectors, the purchaser and its area of operation:

  • the purchase at any title of shareholdings by foreign parties, including (for a period of time, currently until 31 June 2021) those belonging to the European Union, of such significance as to determine the permanent establishment of the purchaser by reason of the assumption of control of the company whose shareholding is the object of the purchase, pursuant to Article 2359 of the Italian Civil Code and the Legislative Decree No 58; and
  • the purchase of shareholdings by foreign parties not belonging to the European Union which assign a share of voting rights or capital equal to at least 10%, taking into account the shares or units already directly or indirectly owned, and the total value of the investment is equal to or greater than EUR1 million.

Threat of Serious Prejudice

If the purchase of any such assets of strategic importance involves a threat of serious prejudice to the essential interests of Italy or a danger to security or public order then, within 45 days from the said notification, and with a decree of the Prime Minister, the effectiveness of the purchase may be conditional on the purchaser's assumption of commitments aimed at guaranteeing the protection of the aforementioned interests.  If the government does not respond during the 45-day period, the transaction is considered authorised under the principle of silence-approval (silenzio assenso).

The government’s assessment on the transaction is based on objective and non-discriminatory criteria and also takes into account any positions expressed by the European institutions.  The governmental check is aimed at verifying whether the post-transaction situation is likely to jeopardise the safety and continuity of supplies, plants and essential production chains as well as whether it can, in general, threaten the national interest.


The violation of the indications or of the procedure, entails the application a penalty which extends from the suspension of voting rights to the nullity of the deeds; in most cases, an administrative sanction is also applied, for an amount up to double the value of the transaction and, in any case, not less than 1% of the turnover achieved by the companies concerned in the last financial year, in addition to the obligation to restore of the status quo ante.

As mentioned in 2.3 Restrictions on Foreign Investments, the most significant legal developments related to M&A are the measures extending the scope of application of the “Golden Power” regime, a system of special intervention powers of the Italian State the purpose of which is to safeguard strategic sectors of national interest, enacted by the Golden Power Decree and extended by the Liquidity Decree.

Decree Law No 137/2020 (the "First Refreshments Decree"), as converted and amended by Law No 176/2020, has further extended by six months, namely from 31 December 2020, as originally envisaged, to 30 June 2021, the scope of application of the obligation to notify the purchase of shareholdings and the related Golden Powers exercisable by the Italian Government including those which result in the assumption of control even by a foreign entity belonging to the European Union.

The extension of such notification obligation concerns:

  • strategic assets, including all those connected to the critical factors referred to in Article 4, paragraph 1, letters a), b), c), d) and e) of Regulation (EU) 2019/452, including those relating to the financial, credit and insurance sectors; and
  • the acquisition of shareholdings, including those which result in the assumption of control by any foreign entity, even belonging to the European Union, as well as those which assign a share of voting rights or capital equal to at least 10%, 15%, 20%, 25% and 50% to foreign parties not belonging to the European Union, regardless of the assumption of corporate control.

Regulations implementing the Golden Power regime were also enacted by the Italian government with DPCM No 179 of 18 December 2020, concerning the identification of assets and relationships of national interest in the sectors referred to in Article 4, paragraph 1, of Regulation (EU) 2019/452 of the European Parliament and of the Council, of 19 March 2019, pursuant to Article 2, paragraph 1-ter, of the Golden Power Decree, and with DPCM No 180 of 23 December 2020 concerning the identification of assets of strategic importance in the energy, transport and communications sectors, pursuant to Article 2, paragraph 1, of the Golden Power Decree.

Significant changes to takeover legislation in the past 12 months have been enacted with the Liquidity Decree, which extended the scope of application of the Golden Power Decree in an effort to protect Italian assets from hostile takeovers by foreign investors.

Stakebuilding strategies are not so customary in Italy considering, in particular, the entry into force of the Market Abuse Regulation.

In relation to shares, under Article 120 of the Consolidated Act on Finance enacted by Legislative Decree No 58/1998 (TUF), as last amended by Legislative Decree No 49/2019 in force as of 10 June 2019), parties with a shareholding in an issuer of listed shares, having Italy as their home member state, in an amount greater than 3% (5% if the issuer is a SME) must notify the company and CONSOB. Under Article 117 of CONSOB Regulation (the Regulation No 11971/1999, as last amended by Resolution No 21016/2019 in force as of August 2019), parties holding the share capital of a listed company must notify the investee company and CONSOB:

  • when the threshold of 3% is exceeded, if the company is not an SME;
  • when the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50%, 66.6% and 90% are reached or exceeded; and
  • when the investment falls below the thresholds indicated above.

In relation to financial instruments:

Under Article 119 of CONSOB Regulation, parties who, directly or through nominees, trustees or subsidiary companies, hold an investment in financial instruments, must disclose to the investee company and to CONSOB when:

  • the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50% and 66.6% are reached or exceeded; and
  • the investment in financial instruments is reduced under the thresholds set forth above.

Under Article 122-bis of CONSOB Regulation, anyone who holds financial instruments to which the appointment of a member of the board of directors or of the board of statutory auditors is reserved, shall inform the issuer and CONSOB if either:

  • it is able to elect on its own a member of the board of directors or of the board of statutory auditors, or it ceases to be able to do so; or
  • it exceeds, with respect to the aggregate amount of financial instruments issued in the same category, the thresholds of 10%, 25%, 50% and 75%, or falls below such thresholds.

In the case of a tender offer, the main hurdles are:

  • any antitrust pre-merger control;
  • regulatory approval of the offering document by CONSOB; and
  • approval of the financing bank.

The bylaws of a limited number of listed companies provide for limits to share ownership.

Dealings in derivatives are allowed, upon certain conditions as described in 4.5 Filing/Reporting Obligations.

Dealings in derivatives are subject to the condition that net short positions are disclosed if they are greater than 0.1% (and following 0.1% steps). Long positions must also be disclosed in relation to both cash settled and physical delivery instruments, when the aggregate position (inclusive of the shares owned by the investor) crosses (upwards or downwards) 5%, 15%, 20%, 25%, 30%, 50% and 66.6% of a listed company’s voting capital (no offset with any concurrent short position is allowed).

Any entity that comes to hold a participation greater than 5% (if mandated by CONSOB) 10%, 20% and 25% of the voting capital in a listed company has to disclose the following to CONSOB, the target company and the public: 

  • how the acquisition has been financed;
  • if it is acting alone or in concert;
  • if it intends to increase its participation, acquire the control of the target company or assert an influence over management;
  • its intentions with respect to current or future shareholders' agreements; and
  • if it intends to propose the expansion of the board or the removal of the directors.

According to the Market Abuse Regulations, a deal must be disclosed when there is a reasonable expectation that the transaction will take place ("reasonable expectation test"). Disclosure may therefore take place prior to the execution of binding documentation, but must specify the effective status of the process.

Market practice on timing of disclosure may differ from legal requirements since the parties may delay disclosure when an early disclosure could jeopardise the negotiations or the completion of the transaction.

The Necessity of Due Diligence

When an M&A transaction is going to be carried out it is very important for a careful legal due diligence to be carried out by specialised outside Legal Counsel. It is usual in an investigation to check the actual contents of a business activity or of some of its aspects, in order to assess them from a legal and economic standpoint. In particular, it consists of gathering, examining and processing documents and information on the business and its parts.

Its fundamental purpose is that of reducing the discrepancies in information between the seller and the potential purchaser on the target of the transaction. By taking a “photograph” of the legal situation of the target business and its main legal risks, potential purchasers can confirm whether or not they are interested in the acquisition, its purpose and feasibility as initially envisaged, and can identify the best possible structure to achieve it. Furthermore, a careful legal due diligence will allow the initial economic valuation, the purchase price and any adjustments of it to be confirmed or corrected, providing a valid support also in the negotiation of the representations and warranties to be requested from the seller.

Broad Scope of Legal Due Diligence

The scope of legal due diligence is very broad, covering the following fields:

  • the corporate situation (including prior transactions that may have involved the target company);
  • business and financial main contracts;
  • the regulatory and administrative situation;
  • real estate properties;
  • employment matters;
  • trade marks and patents;
  • insurance; and
  • litigation.

Particular care must be taken with respect to litigation, both commenced by the target and that against it, as also in the former case significant contingent liabilities could exist (losing the case and having to bear the legal costs, and also dangerous counterclaims). Furthermore, the investigation should extend not only to pending litigation but also to that threatened.

If listed companies are involved, the scope is usually narrower or has higher materiality thresholds, given the large amount of publicly available information. Normally a legal due diligence is inserted into the negotiation process which has already been started up between the seller and the buyer.


In general terms, the pandemic had an impact on the progress of transactions. Of course, in certain cases, the pandemic specifically affected the due diligence phase during negotiations. This may entail, should the negotiations be resumed after a significant period, the specific need of performing a new due diligence exercise.

It is customary that, during the negotiation phase, the parties, enter into standstills and/or exclusivity agreement. Standstill mechanisms are frequent for transactions involving listed companies. Standstills and exclusivity are considered as valid means useful to protect the specific interests of the parties, which may vary depending on the nature of the transaction. This protection can be obtained either by providing specific clauses in the letter of intent or in a non-disclosure agreement or by entering in separate specific agreements.

Terms and conditions of the offer are set in a definitive agreement and disclosed to the public.

The length of process in acquisition/sale transactions may vary on a case-by-case basis. It really depends on the structure of the transaction and on the complexity of negotiations.

2020 transactions experienced several practical delays in terms of length of the entire process, mostly due to the COVID-19 pandemic and relating lockdown measures. In some cases, the implementation of digital means aimed at guarantee the confrontation and negotiations between the parties, notwithstanding the lockdown and social distancing measures, played a crucial role in deals’ positive outcomes.

In addition, from a regulation standpoint, other emergency governmental interventions caused slowdowns in the acquisition/sale processes. In this respect it worth mentioning the Golden Power regulation according to which, subject to certain conditions, it is necessary to submit a notification of the intended investment to the Italian authorities. This notification process may have a delaying impact on the transaction, as a whole.

According to Article 106 of the TUF, whoever has acquired (directly or indirectly) a shareholding in excess of 30% of the ordinary share capital of a publicly listed company is obliged to launch a takeover bid on all the remaining ordinary shares. The obligation also arises for whoever already holds 30% of voting shares and acquires more than 5% of the share capital.

The consideration offered may be cash, existing or new shares or other securities (such as convertible bonds or warrants), or a combination thereof. In the case of mandatory takeover, however, the bidder is required to offer cash payment as an alternative if the offer includes securities that are not traded on any EU Regulated Market.

CONSOB should receive and analyse all necessary documentation relating to the guarantees at least one day before the date of publication of the offer document, as the bidder should must provide evidence that the consideration, whether in cash or securities, is available in advance of the acceptance period.

Mandatory takeover bids cannot be subject to any conditions while voluntary bids may be subject to certain terms.

Common conditions to voluntary tender offers are acceptance thresholds, to ensure that the bidder achieves control of the target (or its de-listing), and antitrust/regulatory clearances. The bidder may include a lenders’ waiver to change-of-control provisions under the relevant financing agreements as a condition to the offer.

The usual acceptance threshold is 50% plus one share (to be calculated by also computing any shares already owned by the bidder). The bidder may reserve the right to waive the condition if the acceptance levels allow them to control the target on a de facto basis.

There are no provisions preventing business combination being conditional on the bidder obtaining financing.

The most common security measure is an equity commitment letter from the purchaser’s shareholders to cover the amount of the consideration.

Minority shareholders can be granted a board representation and veto rights aimed at protecting the essential risk profile of their investment covering: 

  • extraordinary transactions (mergers, spin-offs, disposals of assets);
  • capital increases not at fair market value;
  • the assumption of further indebtedness in excess of given thresholds; and
  • resolutions of the extraordinary general meeting. 

The above-mentioned veto rights are deemed not to create a joint control with the minority shareholder.

In Italy, the voting right can be exercised by proxy upon certain conditions.

During 2020, in the context of the emergency regulation, the Italian government approved the so-called "Cure-Italy" Decree, through which the following provisions were introduced, applicable to shareholders' meetings called by 31 July 2020 or by the date, if later, until which the state of emergency on the national territory (regarding the health risk connected with COVID-19 pandemic) is in force:

Resorting to the Institution of the Appointed Representative

The possibility, for all companies with listed shares, to resort to the institution of the appointed representative pursuant to Article 135-undecies TUF for the exercise of voting rights at ordinary and extraordinary shareholders' meetings, even if any clauses in the By-laws provide otherwise. Moreover, the same companies can also provide in the notice of call that the participation in the meeting is carried out exclusively through the said representative and that they are granted proxies and sub-delegations pursuant to Article 135-novies TUF and as an exception to Article 135-undecies, paragraph 4 TUF.

The above-mentioned provisions also apply to companies admitted to trading on a multilateral trading system and to companies with shares widely distributed among the public.

Obligation to Appoint Said Representative

The obligation for companies with listed shares to appoint the representative referred to above, if they do not adopt remote voting methods, and the power for these companies, in the event that, on the date on which the provisions of the "Cure-Italy" Decree enter into force, a meeting has already been called without the representative having been appointed or remote voting methods having been envisaged, allows the postponement of the meeting or its reconvening.

According to Article 111 TUF, squeeze-out with the forced and simultaneous purchase of all the remaining shares is allowed if the bidder has come to hold at least 95% of the target share capital, after a tender offer on all the target shares. The squeeze-out price is determined by law and is usually equal to the price of the preceding bid.

If the bidder has not reached the squeeze-out threshold (respectively set at 90% and 95%), they may merge the listed target company into a non-listed entity, with the target residual shareholders having a right of withdrawal from the company.

Commitments to tender are common in friendly offers and are usually entered into prior to the launch of the offer itself (less frequently during the offer period). Their execution and contents must be disclosed to the public.

The shareholder is only allowed to withdraw from the commitment to tender the shares in the case of a competing, higher offer.

A bid is made public as soon as the relevant decision has been made by the bidder or the relevant obligation has arisen, provided that they have obtained the financial resources to pay for the consideration.

If the absorbing entity is not listed, the parties to the business combination must make available the following information: 

  • the merger plan, which contains the exchange ratio;
  • the management bodies’ reports, containing the illustration of the legal and business reasons for the transaction;
  • the independent expert’s report on the exchange ratio; and
  • the involved entities’ prior annual three accounts and the transaction reference account.

If the absorbing entity is listed and the shares to be issued amount to more than 20% of the share capital, it is also mandatory to publish an information document containing: 

  • a description of the combination transaction from a legal and business standpoint;
  • the factors of risk in relation to the resulting entity’s business and the shares to be issued;
  • a description of the rights attached to the shares to be issued; and
  • a certified pro-forma accounts for the combined entity.

All parties involved in a transaction must disclose three prior annual financial statements and transaction reference accounts.

When listed companies are involved, also the pro-forma accounts (to be certified and drawn up in accordance with International Financial Reporting Standards and the interpretation provided by the International Financial Reporting Interpretations Committee) are required.

The merger plan is made available to the public.

The manager's/independent experts' reports are disclosed only to the shareholders. If listed companies are involved, all the documentation must be made available to the public. The merger resolutions and implementation act are carried out through public notarial deeds.

The directors of the target company must manage a conflict of “corporate interests”: on the one hand, they must protect the right of shareholders to sell. This right constitutes a “corporate interest” that as such must be facilitated; on the other hand, they must preserve the right of the target company to confidentiality, on penalty of liability under Article 2391, last paragraph and 2392, first paragraph, Italian Civil Code.

The assistance of a specialised Legal Counsel in the due diligence is also important with respect to a possible liability of the directors of the buyer who have decided to acquire a target which then turns out to be detrimental. Since the diligence of the directors under Article 2392, first paragraph, Italian Civil Code, “can never affect management choices […], but only the omission of those precautions, preventive verifications normally required for a choice of this type” (see Court of Cassation, 28 April 1997, No 3652), the performance of an appropriate due diligence must normally be considered to be a mandatory act.

It is not common for board of directors to establish special or ad hoc committees in business combination. Ad hoc committees are formally established only within the more complex transactions; otherwise, the Chief Executive Officer is put in charge of the process and periodically reports to the board. In case of a conflict of interest, eg, in related parties' transactions, the independent/non-related directors must assume a prominent role in the decision-making process.

The target directors in Italy must take a stance on the offer, recommending whether to tender the shares from a financial fairness standpoint (with the help of an independent fairness opinion).  They may take defensive measures (see 9.2 Directors' Use of Defensive Measures) only with the authorisation of a general meeting (in the absence of a prior authorisation under the bylaws).

Under Italian Law, a court-appointed independent expert must render a fairness opinion on the combination exchange ratio. Furthermore, the involved entities’ directors may retain their own advisers on a voluntary basis.

Director’s conflict of interest represents one of the most common subjects of corporate litigation in Italy. Referring to listed companies, CONSOB sometimes opens investigations to verify compliance with the related parties' transaction rules.

Hostile takeovers are rarely carried out in Italy. The TUF admits friendly as well as hostile takeover bids. 

Directors of the target company can take defensive measures, ie, any measure to prevent or frustrate the success of the takeover. This type of action is aimed at raising the costs or reducing the benefits for the bidder and can be adopted by the target before or after the bid has been launched. The TUF regulates defensive measures in principle but does not provide any rules detailing cases or circumstances which would amount to defensive measures.

The effectiveness of defensive measures is affected by the “passivity rule” (ie, any defensive action in response to an offer must first be approved by the target company’s shareholders under Article 104 of the TUF) and by the “breakthrough” (ie, restrictions on voting rights and limitations on the transfer of securities shall have no effect, under Article 104-bis of the TUF).

Typical defensive measures available to the company are:

  • share capital increase by the target company, or the purchasing of its own shares by the target company;
  • conversion of ordinary shares into other financial instruments, or merger with other companies;
  • sale of assets; and
  • awarding “golden handshakes” to the target’s directors if they are removed from office.

Listed companies have the right to waive the passivity rule, in whole or in part, by amending their articles of association and by communicating this decision to CONSOB. While the offeror’s board of directors acts independently, that of the target would need the previous authorisation of the shareholders’ meeting in order to take defensive measures.

When the directors enact defensive measures, they have to obtain the prior authorisation of the general meeting (in the absence of a prior blanket authorisation under the bylaws).

The position of the directors on the bid and their recommendation on whether to offer the shares from a financial equity point of view are not binding on the shareholders or on the bidder. If they seek to take defensive measures, in the absence of prior authorisation under the bylaws, the directors must obtain prior authorisations from the general meeting.

Within the field of M&A deals referring to non-listed companies, arbitration is more frequent than litigation. Litigation in connection with M&A is not common in Italy.

M&A litigation takes place after the closing, usually within the next two years.

In 2020, there have been certain delays also in jurisdictional activities and, therefore, no particular lessons were learned. An increase in disputes can be expected in the next months when court activities will be reinstated on a regular basis.

The scenario that has emerged following the outbreak of COVID-19 and the resulting greater market volatility has widened the operating space for greater shareholder activism.

The focus of activism is aimed at obtaining a better overall management of the investee company, direct representation on the board or an increase in the price of the takeover bid.

Sometimes activists publish a manifesto recommending that the company make certain transactions that, in their view, would raise stock prices. Their aim is to pursue a better overall management and board representation.

Activists have tried to interfere with ongoing transactions through proxy struggles and litigation, attempting to block the implementation of a transaction or obtain a raise in the takeover bid price.

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Trends and Developments


Willkie Farr & Gallagher LLP is an elite New York law firm employing about 750 attorneys in 12 offices located in New York, Washington (DC), Houston, Palo Alto, San Francisco, Chicago, Paris, Brussels, London and Frankfurt and operates in Italy through Delfino e Associati Willkie Farr & Gallagher LLP (DWFG), an Italian law firm with offices in Milan and Rome. DWFG is one of the leading law firms in Italy specialising in public and private M&A deals, including structuring distressed M&A, for both foreign and Italian financial and strategic investors and, generally, equity capital market transactions. In Italy, the firm has assisted on the occasion of both multibillion euro transactions and acquisitions of medium and small caps in a wide variety of industries, including insurance and financial, pharma, fashion and design, automotive, steel, energy, infrastructure and real estate, and has been involved in setting up a number of Italian SPACs.

2020: A Unique Year

The onset of the COVID-19 pandemic in early 2020 represents a crucial milestone and caused an unprecedented health, economic and social crisis, by far the worst since the end of World War II.

At the beginning of February 2020 Italy was the first European country to be severely affected by the outbreak of the COVID-19 pandemic. Starting from March, the Italian government imposed a country-wide lockdown and the shut-down of all non-essential manufacturing and commercial activities. Emergency measures, subsidies and aids were introduced to face the health emergency and boost, or at least try to preserve, the economy, including smaller businesses. Among such actions, the government expanded its veto powers – the so-called “golden powers” – on acquisitions and transactions involving Italian targets operating in certain sectors, such as national security, energy, transports, health, insurance and financial institutions. For a limited period of time, these controls will also apply to transactions involving UE investors.

The COVID-19 impact across the EU

IMF figures show a severe (probably, 7.2%) contraction in European GDP in 2020 as a result of pandemic disruption, while the Middle East and Africa saw declines by 3.2% and 2.6%, respectively. After some initial hesitation, in 2020 the European Union adopted extraordinary measures and showed its ability to remain united, competitive and supportive in the face of the crisis brought about by the epidemics.

Thus, a major turnaround in the EU’s approach to the crisis resulting from the pandemic, inconceivable at the beginning of the year, has taken place with the aim to build a plan for the future. Now begins the wait for the package on the Next Generation EU Fund (also known as the “Recovery Fund”), the new fund for reconstruction, and the new European Union budget.

Other events in 2020

2020 was also the year of the presidential election in the United States and 31 December 2020 marked the exit of the United Kingdom from the European Union.

Rounding out the year

Although in the midst of the so-called “second wave” of COVID-19 infection, the year ended better than it began. In December a pharmaceutical company announced that its COVID vaccine was 95% effective and on Christmas day the vaccine arrived in Italy.

All of the above has had an impact on M&A in 2020 and will continue to impact M&A in 2021.

Developments and Trends in the Market

The unprecedented shock which dominated  Italian M&A and the relevant legal market did not stop M&A entirely, but M&A in Italy did experience a clear slowdown.

According to Willis, in 2020, globally, transactions completed had a value of at least USD100 million and numbered 674, significantly lower than the 774 transactions registered in 2019 and the lowest since 2009, in which 322 such deals were recorded.

Despite the negative impact of COVID-19, however, data from Q4 of 2020 revealed a deal-making rebounding with 246 major deals completed against the 210 transactions of Q4 of 2019.

Capital markets and public M&A

As regards capital markets and public M&A, in the United States 2020 was the year of the SPACs (Special Purpose Acquisition Companies), ie, vehicles that, once incorporated by one or more promoters, raise financial resources on the capital market through an IPO, with the aim of integrating themselves through a business combination with a target company, leading to its listing on the stock exchange. Indeed, data provided by Spac Research show how in 2020 SPACs have raised over USD35 billion, almost triple the amount raised in 2019 (USD13.6 billion). So much so that, according to JP Morgan, nowadays, with regard to expansion opportunities, the alternative is no longer just between traditional M&A and recourse to capital markets, but among M&A, IPOs and SPACs.

In Europe, M&A activity has continued against a background of political and economic uncertainty.

In Italy in particular, in March 2020 the flow of M&A stopped and for a couple of months almost no transactions were announced: such an abrupt standstill was really a rare, if not a unique event. The Italian SPAC business, which at one point used to be important, also continued its slow down from the hype of the prior years.

The contexts in which the slowdown occurred are various: deals which were in progress and already announced to the market were suspended and, in the best of cases, significant extension of timing to achieve signing or closing were agreed, until more clarity was available and detailed assessments could be made; some transactions definitely aborted; in those deals for which binding agreements had been signed before the health emergency, buyers sometimes looked for an exit strategy prior to closing. At first, financial investors and strategic investors alike set aside growth plans and focused on day-to-day business, while smaller businesses and entire industries, such as tourism, faced dramatic liquidity crises.

Analysing the impact of COVID-19

In the light of the above, on the whole, the 2020 Italian M&A market closed in decline compared to 2019: the health emergency slowed down transactions, driving a contraction both in terms of number of deals (830 compared to 1,085 in 2019) and overall counter value (EUR34.5 billion compared to EUR52.4 billion in 2019). Interestingly, in 2020 private equity funds, rather than strategic investors, have played a key role in Italian M&A. The crisis probably made it easier for professional, as opposed to strategic investors, to invest in M&A.

KPMG reports that the sharpest decrease affected, in particular, foreign led transactions. In the first nine months of 2020 only 138 transactions were completed by foreign operators interested in Italian targets, for a total value of EUR3 billion (compared to transactions for a counter value of EUR15 billion recorded in the same period of 2019). Never in recent times was such a low transaction value reached and, no doubt, foreign buyers were less active also due to travel restrictions and sundry logistic difficulties.

Remarkably, in the first three quarters of 2020 the aggregate value of investments by Italian deal makers in foreign companies was moderately affected by the pandemics and amounted to EUR11.9 billion - ie,  only 7% less than the same period of 2019. More precisely,  the number of transactions contracted considerably (they fell from 150 to 90), but the size of the transactions increased considerably: Moncler, for example, acquired Stone Island for about EUR1.5 billion, the Atlantia Group increased its presence in South America and acquired 72.3% of the share capital of Red de Carreteras de Occidente, the company managing the freeway network in Mexico and even Leonardo spent, on a cash free/debt free basis, EUR185 million, plus an earn out, in the Swiss helicopter company Kopter.

Deal figures

For the entirety of 2020, Ernst & Young recorded approximately 519 deals with targets in Italy, compared to 644 deals in 2019 (down 19.4% in terms of number of deals as against 2019). Further to the months of lockdown imposed from March to May 2020, the first half of the year had ended with the lowest aggregate value recorded since 2009 (EUR16.6 billion, 219 deals).

A significant recovery was registered, however, in the second half of the year, with around 300 deals, for a total value of EUR22.4 billion.

The above figures were driven by a few transactions with very high counter values. Indeed, the incidence of “mega-deals” - ie, those with an acquisition value exceeding EUR1 billion - was particularly significant.

By way of example, three of the most important Italian deals were:

  • in the banking field, Intesa San Paolo carried out the acquisition of UBI Banca to create the largest Italian banking group and the second-largest bank, for capitalisation, in the Eurozone;
  • Giuliana Albera Caprotti and Marina Caprotti acquired 30% of Supermarkets Italiani S.p.A. from Violetta and Giuseppe Caprotti. (Esselunga) for EUR1.8 billion; and
  • the merger of Nets (a private equity-backed company, leader in digitally advanced payments markets in Northen Europe) into Italian Nexi, a European champion in digital payments, has created a pan European PayTech player positioning on the market as the largest payments group in Europe.

Transactions in 2020

Shifting focus to transactions in the so-called mid-market - ie, traditionally the most prominent segment in the local M&A market - in terms of value, 2020 witnessed a considerable decrease in transactions, from an annual value of EUR23.3 billion in 2019 down to EUR17.6 billion in 2020.

There were 15 transactions worth between EUR100 million and EUR1 billion, involving a number of historic names in the Italian economy. The Agnelli family's Exor took over the GEDI publishing group, whose majority was held by the De Benedetti family, through their CIR holding. The latter in turn merged with Cofide, simplifying the structure of the group.

Active sectors

The reduction in the value of M&A investments affects almost all sectors, with the exception of a few, which better reacted to the economic crisis and recovered, such as high tech, telecom and generally the financial sector.

In 2020 the financial sector has been the most active in M&A from a value of transaction perspective: with the "consumer" segment, it accounts a share of more than 50% in terms of value of transactions closed in 2020.

Further to the pandemic, technology has for sure become more and more attractive to buyers, as long as all companies are now accelerating a shift to digitalisation and use of technology. This is a relatively new trend.

Sectors under pressure

The number of Italian transactions which actually completed fell down especially in those sectors which are most penalised by the anti-COVID restrictions and the climate of distrust, such as fashion and generally retail. Consumer goods also suffered, with the exception of food and, interestingly, design and furniture, which proved remarkably resilient.

Transports, leisure and construction sectors were negatively impacted and appeared to be less attractive to foreign investors.

On the other hand, there has been a trend in favour of concentration amongst Italian players in fields such as construction and fashion.

Changes in M&A mechanics

We have also observed that the outbreak has led to a change in some of the mechanics of the Italian M&A deals, resulting for example in new priorities in due diligence reviews, which are now expected to consider how the pandemic has impacted the target’s material contracts, or the working environment. Buyers are also keen to investigate whether target qualifies for certain types of government support. Also, in due diligence, site visits are nowadays restricted and face to face meetings are also discouraged. This has resulted in extended due diligence timing and longer lasting negotiations.

Other aspects of M&A deals, conversely, have not changed. This is the case, for example, of the “material adverse change” clauses, ie, typically those provisions which, in M&A agreements, define the unforeseeable circumstances which significantly and negatively impact on the value of the target and whose occurrence may allow the buyer to exit the acquisition. Indeed, one would have expected that in standard practice COVID-19 related emergency issues would be included in the definition of “material adverse events”.

However, in many transactions, this did not occur. Perhaps this is due to the fact that the impact of COVID-19 on pending deals was perceived as not a long term concern and, mostly, deal-makers focused on longer term issues in deciding whether to pursue a certain transaction. Further, the data may be somehow unreliable: the impact of the epidemics probably was already discounted on the deals that closed and, obviously, not much can be shared concerning the deals that have been aborted.

Outlook and Expectations for 2021

As stressed in a recent Bank of Italy report, in the context of the COVID-19 pandemic, forecasting economic activity has become more challenging and complex. The development of the M&A market in Italy in 2021 will depend on a number of macro-issues which investors do not control, including how the vaccination campaign will progress, how the Next Generation EU funds will be effectively used and whether the new government will manage to be effective and successful in a context of serious macroeconomic instability. Uncertainty and the drop in the corporate profitability of companies operating in industries which are traditionally perceived to be leaders in their fields (automotive, mechanics, retail, tourism) may negatively affect M&A, to the extent that potential sellers may choose to delay the disposal of assets which they perceive to be undervalued.

This will not be the case of companies operating in sectors which have suffered less, such as pharma, food, and both the finance (including insurance) and the technology and telecom sectors, where in the next months interesting M&A and general consolidation is expected to take place. Investments are expected in infrastructure, including M&A, to considerably increase in 2021.

In addition, in 2021 a significant increase in M&A in distressed assets, hotels and general tourism is expected, being the premiere targets, but this is not limited to these sectors.

This expectation is supported by the level of M&A activity which has been developing in the first quarter of the year. Indeed, while in the first half of 2020 M&A dramatically suffered the effects of the outbreak, already the end of 2020 proved the resiliency of the market which later in the year seemed to adapt and recover. At the moment there is significant M&A activity, either in relation to deals which paused and have now restarted or because of new opportunities which have now emerged.

Wider expectations in Europe

In the EMEA area, according to Mergermarket, the telecom and the consumer sectors are expected to experience the greatest level of M&A activity in 2021. Pharma and technology fields are also likely to be particularly attractive to investors. Also KPMG believes that 2021 will be dominated by the "winning" segments already mentioned (ie, fintech, digital, healthcare) and by the best assets, which will also benefit from better valuations. If this will be the case, in the post COVID-19 market it would be reasonable to foresee more earn-outs to be introduced in the structure of M&A deals.


Subject to the uncertainties which inevitably apply in such an unprecedented context, it is fair to assume that in 2021 the rebound in the Italian (and not only Italian) M&A market will be significant. On the one hand there will inevitably be increased M&A activity in those sectors which were more negatively affected by the COVID-19 pandemic, especially so in the case of industries which were in need of consolidation or whenever companies proved unable to adequately respond to the structural changes imposed by the crisis, such as, in the case of Italy, fashion, tourism, parts of the food industry, retail, tourism. On the other hand, M&A activity in healthier industries such as design, pharmaceuticals, technology, telecom and generally infrastructure are likely to increase.

The combination of the two, that is, the increase in distressed M&A, the need to consolidate to face the effects of a pandemic and the usual quest of investors for accelerated growth opportunities are likely to reinforce one another and result in an increase both in the number of deals and the aggregate value of M&A transactions in Italy in 2021.

Delfino e Associati Willkie Farr & Gallagher LLP

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Law and Practice


Nunziante Magrone Studio Legale Associato is an independent multidisciplinary Italian law firm. Thanks to the specific expertise of its professionals, the firm is able to assist its clients in all major areas of business law through its departments. Nunziante Magrone has more than 80 lawyers with offices in Milan, Rome and Bologna. Nunziante Magrone has a strong international practice and is consistently listed for its members’ expertise.

Trends and Development


Willkie Farr & Gallagher LLP is an elite New York law firm employing about 750 attorneys in 12 offices located in New York, Washington (DC), Houston, Palo Alto, San Francisco, Chicago, Paris, Brussels, London and Frankfurt and operates in Italy through Delfino e Associati Willkie Farr & Gallagher LLP (DWFG), an Italian law firm with offices in Milan and Rome. DWFG is one of the leading law firms in Italy specialising in public and private M&A deals, including structuring distressed M&A, for both foreign and Italian financial and strategic investors and, generally, equity capital market transactions. In Italy, the firm has assisted on the occasion of both multibillion euro transactions and acquisitions of medium and small caps in a wide variety of industries, including insurance and financial, pharma, fashion and design, automotive, steel, energy, infrastructure and real estate, and has been involved in setting up a number of Italian SPACs.

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