Due diligence, information and disclosure in M&A transactions in Italy
Articolo tratto da Lexology
In the first half of 2016, the M&A market in Europe registered 3,110 deals, for an overall value of about $342.8 billion (which represents a 19.3% decrease in value compared to the first half of 2015, which amounted to an overall value of about $424.5 billion).
According to Mergermarket, even though this was the worst bi-yearly result since 2013, Italian and other local markets have been experiencing significant growth. In particular, based on the relevant KPMG report, the first nine months of 2016 saw 551 acquisitions in Italy, amounting to €39.2 billion (which represents a 56% increase in value compared to 2015).
This extraordinary growth was mainly driven by an increase in foreign investor confidence, particularly from US and Asian investors.
Italian M&A activity has not been significantly affected by Brexit, and public opinion is that until Brexit negotiations are concluded, M&A transactions will remain the same. However, the
long-term outlook will depend on getting greater clarity on the ultimate terms of Brexit. In this context, there may be changes to the details of M&A transactions which are directly affected by EU regulation. For example, proposed acquisitions which meet the EU Merger Regulation thresholds benefit from the European Union’s one-stop shop clearance process, avoiding the need for clearances in multiple EU member states; however, post-Brexit, M&A transactions involving both Italian and UK players may require both UK and EU notifications.
The automotive, chemical, transportation, telecommunications, energy, mining and utilities sectors have experienced the most M&A activity.
…M&A deals are subject to the Civil Code. For example, the provisions concerning contracts in general apply to contracts regulating M&A deals (Articles 1321 and following of the Civil Code). As far as quota deals for limited liability companies, Article 2470 of the Civil Code – which regulates the validity, publicity and enforceability of public deeds for quota transfers – applies. Share deals for companies limited by shares are subject to Articles 2022 and 2355 of the Civil Code, which regulate registered share transfers or endorsement. Asset deals for companies engaged in commercial activities are subject to Article 2555 and following of the Civil Code. Where real estate assets are involved in the deal, their transfer is regulated by Article 2643 and following of the Civil Code. Mergers and de-mergers are governed by Article 2501 and following of the Civil Code.
In a July 24 2014 decision, the Supreme Court clarified that business representations and warranties in stock sale and purchase agreements are not subject to the restricted one-year statute of limitations applied to warranties in sale transactions, but instead to the general contractual 10-year statute of limitations.
CONSOB is the regulatory authority empowered to supervise takeovers involving Italian listed companies which have shares listed on regulated markets. Borsa Italiana, a private company in charge of managing Italian capital markets, regulates certain aspects of public tender offers (eg, the duration of offering periods and de-listing).
From a legal standpoint, early preparation for sale may include a sell-side due diligence exercise, followed by corrective actions (as required) – for example:
- settling pending disputes or tax assessments;
- checking for the absence of environmental issues;
- improving the quality of financial reporting;
- analysing relationships with customers, suppliers and employees; or
- securing and protecting IP rights.