GENOA — The Italian government is proceeding with new measures to protect “strategic” companies against foreign takeovers, with aerospace and defense entities topping the list.
The first companies to be protected are, Avio and Fincantieri. A scheme of decree is being approved by the cabinet; next it will be evaluated by the State Council — the highest administrative authority — and by the parliament commission.
Future decrees will take care of energy, transportation and telecommunications companies.
Under the proposed legislation, any potential buyer interested in acquiring a stake — and not even a controlling one — in an Italian company of strategic relevance must get the approval of the Italian government, which could impose conditions and sanctions or block the acquisition completely.
The government will also have a say on any decision by the companies which could jeopardize the national interest.
Given its troubled fiscal situation, the Italian government is under strong pressure to sell assets and reduce debt. So despite the new rules, it may be very difficult to avoid selling some of its interests, even the “crown jewels” of Italian industry.
The new legislation is expected to be compatible with EU regulations and is to some extent less strict compared to the regime that is already in place, which was criticized by Brussels.
The proposed legislation also specifies which areas of the strategic companies are not deemed strategic. For Finmeccanica, this includes the joint ventures SuperJet International,, , NH Industries and the U.S. defense electronics subsidiary DRS Technologies. Also on the list are Ansaldo Energia (its energy business) Ansaldo Breda and Ansaldo STS (railways) and Bredamenarinibus (buses).
For this reason, Finmeccanica’s plans to totally or partially divest its civil energy and railway businesses will not be affected by the new rules. But any decision to sell “core” activities deemed to be of strategic relevance would need to receive a preliminary go-ahead from the government.
Avio should also be largely unaffected by the new rules, even though most of its activities are considered “strategic,” because it is already controlled by foreign entities, in particular by the Cinven investment company which owns 84% of the capital. Another 14% is owned by Finmeccanica, which has announced its willingness to divest its share. An agreement has been announced with the state-controlled Cassa Depositi e Prestiti, which will acquire Finmeccanica’s interest in Avio, whether or not Cinven proceeds with a planned IPO.