The Thirteenth Directive and Takeover Regulation in Italy Marco Ventoruzzo Università Commerciale L. Bocconi, Milano “The Future for Takeovers in the EU: Implementation of the Takeover Directive” BIICL, London, May 12, 2006

Key provisions of the Thirteenth Directive and Their Potential Impact on Italian law Event triggering the compulsory tender offer: threshold, extensions, exemptions (art. 5); Conditions of the compulsory tender offer: in particular, the price (art. 5); Action in concert (art. 2); Passivity rule (art. 9 & art. 12); Breakthrough rule (art. 11 & art. 12); sell-out and squeeze-out (art. 16 & art. 15).

Event triggering the compulsory tender offer: threshold, extensions, exemptions. 30 percent as triggering threshold: but underlines control; Extensions: acquisition of an empty shell whose most important asset is 30% of a listed corporation; tender offer for acquisition of 3% in between 30 and 50%; Exemptions: art. 5, § 2 of the directive, voluntary bid on all the “securities”; other exemptions (temporary acquisitions, acquisitions for turn-around, involuntary acquisitions…).

The price of the compulsory tender offer. Art. 106 of TUF: average of the market price and highest price paid in the last 12 months; Art. 5, § 4 of the Directive: highest price paid in the last 6-12 months; The problem of “hidden” prices: e.g. when a bidder buys a non- listed corporation controlling a listed one, which represents its major asset, and the consideration for the purchase is neither cash nor securities, but the obligation to pay the debts of the non-listed corporation.

Action in concert. Art. 2, § 1 (d) of the Directive: the “goal” of the agreement is relevant; Art. 109 of TUF: objectively identifies specific relationships (shareholders’ agreements, groups of companies, directors and chief executives) that represent a irrefutable presumption of action in concert.

Passivity rule. Art. 9 of the Directive similar to art. 104 of TUF, but:  Period in which the issuer is subject to the passivity rule: even before full disclosure?  Vote in the shareholders’ meeting: Supermajority (same threshold that triggers the compulsory bid); “Majority of the minority”: exclusion of the controlling shareholder and of the bidder; Article 11 directive: opt-out (or reciprocity).

Breakthrough rule. Only for compulsory bids, or also for voluntary bids (at least if extended to all the outstanding shares)? Possibility to opt-in, with the exception of the existing rule on shareholders’ agreements.