Italian M&A Through the loophole

The battle for Italian banks Antonveneta and Banca Nazionale del Lavoro has highlighted a flaw in the Italian takeover code. The mandatory buyout – a mechanism forcing an investor taking a stake in a company over 30% to buy the rest of its shares – is supposed to give minority investors comfort that they will be bought upon any change of control. However, it can in some circumstances be used to short-change minorities. The price of mandatory buyouts is set by a formula: the average of the top p...