takeovers regulation in italy: empirical analysis and recent developments marco ventoruzzo bocconi...
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Takeovers Regulation in Italy: Empirical Analysis and Recent Developments
Marco VentoruzzoBocconi University
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Takeovers Regulation in Italy: Empirical Analysis and Recent Developments
• Overview of Recent Developments– Mandatory Bids (Art. 106 TUF)– Board Neutrality (Art. 104 TUF)– Breakthrough Rule (Art. 104-bis TUF)
• Empirical Analysis (1998-2008)
• Assessment of the New Regulatory Framework
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1998 T.U.F. 2007 XIII directive
full voting shares
limited voting shares
30%
full voting shares
limited voting shares
30%
(shares voting on a/r of directors)
Cost of the Mandatory Tender Offer: Number of Shares
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Minimum Price of the Mandatory Tender Offer: e.g., Takeover of Edison by EDF (October 2005)
P(hp)2.18
P(mm)1.86
P(ma)1.53
P
outstanding full-voting shares(1.303.010.879)
~ 417 mil. euroP(to)
Q
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69%
31%
Average Market Price and Maximum Price Paid
P(hp) > P(ma) P(hp) < P(ma)Source: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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Board Neutrality and Breakthrough Rules
1998 TUF2007 TUF
(implementation of XIII directive)
2008 TUF (anti-crisis decree)
Board neutrality Mandatory Mandatory, subject to reciprocity
Optional, subject to reciprocity
BreakthroughOnly for some shareholders’ agreements (art. 123 TUF)
Mandatory, subject to reciprocity (except some shareholders’ agreements)
Optional, subject to reciprocity (except some shareholders’ agreements)
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Mandatory board neutrality
Mandatory breakthrough Reciprocity
Austria yes no no
Belgium yes no yes
Czech Republic yes no yes
Denmark no no yes
Finland no no no
France yes mixed yes
Germany no no yes
Grece yes no yes
Italy no no (yes 123 TUF) yes
Netherlands no no yes
Poland no no no
Portugal yes no yes
Spain yes no yes
Sweeden yes no no
United Kingdom yes no no
Source: Maul, Muffat-Jeandet, Simon (2008), Italy updated
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Takeovers Regulation in Italy: Empirical Analysis and Recent Developments
• Overview of Recent Developments– Mandatory Bids (Art. 106 TUF)– Board Neutrality (Art. 104 TUF)– Breakthrough Rule (Art. 104-bis TUF)
• Empirical Analysis (1998-2008)
• Assessment of the New Regulatory Framework
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voluntary mandatory (106 §§ 1, 3)0
20
40
60
80
100
120
97
77
Number of Tender Offers on Shares In Italy (1998-2008)
Source: Galliani, Ghezzi, Mosca, Ventoruzzo (2008) & Malberti (2008)
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voluntary mandatory (106 §§ 1, 3)0
20
40
60
80
100
120
Number of Tender Offers on Shares in Italy(1998-2008)
hostile (5)
Source: Galliani, Ghezzi, Mosca, Ventoruzzo (2008) & Malberti (2008)
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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080
10000
20000
30000
40000
50000
60000
70000
0
5
10
15
20
25
30
35
40
45
50
Mandatory Tender Offers in Italy and M&As in Europe
EU (left scale) Italy (right scale)Source: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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35%
28%
37%
Target per Industry
financial manufacturing servicesSource: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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52%
10%
17%
21%
Bidder per Industry
financial manufacturing services newcoSource: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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56%
44%
Industry of Bidder versus Industry of Target
same industry different industrySource: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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CS < 30% 30% ≤ CS < 50% CS ≥ 50%0
5
10
15
20
25
30
35
40
45
15
21
41
1
68
Target’s Ownership Structure Before Triggering Event
all cases shareholders' agreementSource: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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24.67%
75.33%
Target’s Ownership Structure Before Mandatory Offer (and after triggering event)
30% < CS-bidder < 50% CS-bidder ≥ 50%Source: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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75; 96%
3; 4%
Revised Offer at Higher Price
no better offer better offer
+ 9%
+ 0.085%
+ 1.45%
Source: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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87%
4%3% 3% 3%
Bidder’s nationality
Italy Luxemburg Netherlands France Germany
Bidder listed corporation
Source: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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P(hp)
P(mm)
P(ma)
P
P(to)
t
Price of the Tender Offer
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P(to) < P(mm) P(to) = P(mm) P(to) > P(mm)0%
10%
20%
30%
40%
50%
60%
3%
44%
53%
Price of the Mandatory Tender Offer
Source: Galliani, Ghezzi, Mosca, Ventoruzzo (2008)
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0 10 20 30 40 50 60
51.98
46.13
48.14
37.91
18.26
Average Controlling Shareholder (%)
U.K. Spain Italy Germany France
Source: Van der Elst (2004)
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Takeovers Regulation in Italy: Empirical Analysis and Recent Developments
• Overview of Recent Developments– Mandatory Bids (Art. 106 TUF)– Board Neutrality (Art. 104 TUF)– Breakthrough Rule (Art. 104-bis TUF)
• Empirical Analysis (1998-2008)
• Assessment of the New Regulatory Framework
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• 1998 TUF– Protecting Minorities in Friendly Takeovers, Compromise
with Excessive Cost of Takeover;– Acknowledging and Addressing Conflict of Interests in the
Adoption of Defensive Measures;– Harmonizing Regulatory Framework
• 2008 TUF– Takeovers Potentially More Expensive for Bidders;– Abolition of Mandatory Board Neutrality and Breakthrough
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1990 1998 2003 20050%
10%
20%
30%
40%
50%
60%55%
47%45% 45%
17%14%
17% 18%
28%39% 38% 38%
Evolution of Ownership Structure of Italian Listed Corporations (1990 – 2005)
Largest shareholder Other relevant shareholders Dispersed ownership
Source: Bianchi, Bianco (2006)