Introduction

The takeover bid (OPA) and corporate climbs are a central issue of financial market law, as they place emphasis on the protection of target society and its stakeholders with the need to ensure the contendibility of control, indispensable for the efficiency of the market. The Italian regulation, defined byTUFand byCONSOB, seeks to strike a balance between these requirements, limiting the use of anti-scale defences in order to protect market freedom, but allowing for neutralization tools.

The State therefore seeks to refrain from interfering in the affairs of private companies as far as possible, but sometimes this is not possible because of the size and socio-economic importance of the parties involved in such operations. to protect sectors considered strategic for the national interest These powers allow the government to examine, block, lay down conditions or even prohibit acquisitions and corporate transactions that, although formally legitimate in terms of company law and market, could jeopardise national security or essential public interests.

The Pirelli case of 2023 is an emblematic example of the application of golden power, in which the State intervention has highlighted the complex interaction between the public sphere and private market dynamics, with the aim of balancing the entrepreneurial autonomy with the protection of national strategic interests.

 

The rules governing takeover bids and the phenomenon of corporate climbs

L'OOPAis a mechanism well governed by Articles 02-112 of the Single Finance Act (TUF) and by certain rules of the National Commission for Companies and the Stock Exchange (CONSOB), an independent authority which supervises the Italian markets. It is a noteworthy offer, presented by any person (even private) who intends to purchase (or have them purchased) a certain number of shares (or other financial instruments) of any company, whether listed or not.

It is therefore an invitation to disinvest, to sell, to be wound up and then to cash, addressed to those who own the target company shares by those who wish to take possession of it, while the bidder strengthens or wins a stake in the target company.

This phenomenon is typical of large companies, since managing a large enterprise requires specific knowledge and large capital, so, in virtually all cases, the stakeholders concerned to control a public limited company are companies or entrepreneurs already in business. In addition, climbing usually takes place in large companies, where the substantial share capital translates into the so-called "Pulverization of the share ownership" i.e. the acquisition of small shares by a myriad of investors for purely speculative purposes, without any entrepreneurial desire, and therefore it is easier to "rake" a substantial share package on the market.

Basically, the acquisition of a company can befriendly takeover orhostile takeover, depending on whether the transaction is carried out with or without the consent or against the will of the management and the Board of Directors of the latter. It is defined, therefore, as hostile takeover l'acquisition which aims to obtain a control position in the company (obtaining the majority of the votes) without the agreement and collaboration of the Board of Directors itself and the management of the target company.

The hostile takeover transactions represent a significant threat to the stability of listed companies. In recent decades, numerous defensive strategies have developed, bothpreventativethatreactive, aimed at protecting corporate control and ensuring continuity of governance.

Defense techniques and interests at stake

The various defences that society can implement in opposition to the climb pose questions of legitimacy and compatibility with the principles that govern the market and corporate governance. On the one hand, they protect the company and its stakeholders from speculative or destabilizing manoeuvres.

On the other hand, they risk reducing the contensibility of control and protecting management excessively, even in situations where a change of governance could be more efficient.Control compatibilityThe Commission has already made a number of proposals for the introduction of a new system of taxation.

If the law makes the transaction too complex or costly, the majority will have nothing to fear, even if it is badly managed, and even if it determines the depreciation of the shares. In doing so, however, the inflow of new capital into the stock market is not encouraged: therefore, the contendibility of the control is also deserving of protection, because a takeover, in the end, indirectly stimulates the value of the shares. Wanting to seek a balance between interest of the buyer and interest of the minority.

 

Possible techniques of defense from climbing

Corporate defensive strategies can be reduced in two macro-categories:the preventive defences(ex ante) andreactive defensesThe first aims to make the company already in the state-owned structure and the reactive defences less sustainable, which can be activated when the offer has already been launched, thus discouraging investors from acquiring the company. The second ones, on the other hand, are activated when the hostile offer has already been launched. This distinction allows to appreciate the differences not only from the operational point of view, but also from their compatibility with the principles of transparency and fair market.

 

Preventive defences (ex ante)

 

The preventive defences, as already established, are placed at the level of theStaff RegulationsorfinancialThe aim of the project is to discourage any hostile attempts to acquire.

  • I'm sorry.Pison pill:The most common method is to launch a new system of control of the company.capital increase, through which a quantity of shares is offered at a favourable price to existing shareholders; this transaction, increasing the number of shares in circulation, allows the dilution of the participation of the potential buyer.

    But there are also options reserved for existing shareholders to purchase a certain amount of shares at a favor price. Especially in the United States, it is very often that they come across groups where directors control the company without even owning an action (but only options) making companies in fact contendable.

    Various techniques can be used in addition to the capital increase, but the objective is always the same, increasing the number of shares in circulation (capital increase) and thus making takeover more expensive, thereby reducing the participation of the hostile entity and making the operation more economically costly.

  • Limited statutory clauses: The statutes or articles of association may include limiting mechanisms of climbing. Examples are the maximum voting rights (limited vote), quorums strengthened for the approval of strategic resolutions, or pleasing clauses.

  • I'm sorry.Multi- or increased voting shares: The Italian law favours the principle of "one share," a vote" , . Recently, following reforms, the multi- and majority voting shares have spread in the Italian law. This type of shares strengthen the power of stable shareholders and reduce the contentibility of the company, leading to concentrations of power.

  • I'm sorry.Registered Board: The introduction of renewable boards only partially per year slows the offeror's ability to obtain control of the board.

  • I'm sorry.Golden shares: the legislator grants the State or public bodies the power to appoint directors and mayors, and in companies of national interest (e.g. RAI), these powers extend to the management, transferability of shares and voting rights. There are also special powers, which are recognised by the State, in the field of golden power: when a company carries out a strategic activity in the field of defence and national security, as well as on companies which hold strategic assets in the energy, transport, and communications sectors, the State has the power to oppose or make subject to specific conditions the taking of significant participations in the same, as well as the right to veto or to make subject to specific conditions the adoption of a number of decisions of particular importance. The current discipline allows to activate the golden power regime only as a result of serious threat to national security, to the defence, to the operation of the networks, and of the installations, and to the continuity of supplies.

 

reactive defences (ex post)

 

The reactive defences are activated after the launch of a hostile offer and aim to neutralize it through extraordinary operations or market interventions.

  • White knight: search for a white knight, i.e. a friendly subject who launches an alternative offer, more favourable to society and its management.

  • I'm sorry.Pac-ManDefense: the company threatened by a hostile acquisition "rebalances the situation" trying to acquire its potential buyer.

  • I'm sorry.Crown jewelsDefense: disposal of the most valuable assets (so-called crown jewels) to reduce the company's attractiveness in the eyes of the bidder, even if it is likely to weaken its structure.

  • I'm sorry.Buy-back of own shares: Massive repurchase of its shares on the market, thus making the company reduces the number of securities available, increasing the value of share capital per share and creating a "custion" of shares that can be used strategically.

  • I'm sorry.Defensive merger/incorporation operations: mergers with allies or corporate restructurings aimed at making the acquisition of control more complex.

 

Critical profiles and obstacles to defense techniques

Under the current rules, the legislator has a rather restrictive attitude towards the defence techniques that the target company's command group can implement: the implementation of such measures is only permitted with the permission of the assembly (liabilities rule), but the statute may derogate in whole or in part from this rule (opt-out clause).liability rule• provides that directors of the target company with listed shares must refrain from carrying out acts or operations that may counter the achievement of the objectives of the offer. However, the prohibition may be removed by resolution of the meeting, convened on slope of the ordinary or extraordinary takeover bid, by normal majority.

As regards the implementation of these mechanisms, if the subsequent defence techniques are rather easy, the same does not apply to preventive defence techniques. Indeed, shareholders wishing to join a takeover bid can freely withdraw from any voting/blocking unions, and the purchase of a significant participation in the company that launches the takeover bid is no longer feasible.

Indeed, theXIII Directive(2007) was an opportunity to extend the neutralization rule for such defence measures; however, the 2008 Reform provided that this framework would only operate if the statutes provide for it. However, if the status of the target company listed permits its application, the neutralization rule operates as follows.Not have effectany statutory limitations on the transfer of securities and, in assemblies, do not impose the restrictions on the right to vote provided for in the statutes or by parasocial agreements, nor the statutory increases in the right to vote, and multiple voting shares confer only one.

After the OPA, the neutralization ruleparalyze efficacyof some statuary clauses or parasocial pacts with the aim of preventing the victorious bidder from achieving the actual domain. Indeed, in the first assembly after the takeover bid, no such limitations, no voting increases, no multiple voting; so, the new command group can appoint trusted directors, and modify statutory clauses not welcome without obstruction. These effects take place, however, only if following the takeover bid the bidder holds at least seventy-five percent of the capital with voting rights.

Finally, the regulation of takeover bids through mechanisms such as liability rule and neutrality is designed to ensure the compatibility of control with market and shareholder protection, but this is at the expense of corporate stability, as it reduces the effectiveness of preventive defences and limits the reactive powers of management.balanceagainimperfect, which could be improved by rethinking to ensure both market opening and safeguarding business continuity.

 

Pirelli case and practical application of defence techniques

 

One of the most emblematic cases in the context of acquisition operations and anti-scale defences is the casePirelli. In 2015 the Chinese group of companiesChemChina, through the launch of an OPA, acquired control of Pirelli. This led to the company's delisting from Piazza Affari. Only two years later, in 2017, Pirelli returned listed, with a widespread floating and a parasocial pact among the main shareholders aimed at ensuring the stability of the corporate governance structure.

 

The criticalities of this operation emerged in 2022-2023, in fact, the Italian Government decided to exercise the powers ofgolden poweragainst the Chinese parent company (now again named Sinochem), imposing constraints on the influence of the majority shareholder on strategic decisions and governance bodies. The state intervention was motivated by the need to preserve the managerial autonomy and national security, in view of Pirelli's technological and industrial importance.

 

The case shows that, in the face of foreign State investors, theTraditional techniques difideaThe company may beinsufficient, making it necessary to use public law instruments. Pirelli becomes a paradigm example of how the dynamics of hostile climbs are today interwoven with market discipline, industrial policy and the protection of national strategic interests.

 

Conclusions

The analysis of takeover bids and corporate climbs highlights the delicate balance between control and protection of target society. While defence techniques are useful tools against speculative transactions, they must not hinder the entry of new capital and market efficiency.The Pirelli caseshows that, in a global context, the only rules of privatisation are no longer sufficient: the protection of strategic assets also requires public intervention through instruments such as golden power. It emerges a system in which company law, market regulation and industrial policy are increasingly closely interwoven.