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Between 2005 and 2025, openly hostile takeover bids — those where the target’s board of directors expresses a contrary opinion — launched on the Milan Stock Exchange can be counted on the fingers of one hand. Over the same two decades, on the London market, hostile takeovers numbered more than two hundred, according to LSE and Mergermarket data.
The difference is not a matter of entrepreneurial style. It is the symptom of a market for corporate control that is substantially blocked. And a blocked market for corporate control — any corporate finance textbook will confirm — produces lower average managerial quality, lower valuations, and international capital that avoids the Milan exchange.
It is worth understanding why we are in this configuration and what we are losing.
Factor 1 — Capital structure
Most Italian medium-to-large listed companies have a controlling shareholder (a family, a foundation, a historic industrial group) holding directly or through shareholders’ pacts a stake above thirty to forty percent. The 90 historical issuers of the FTSE MIB and Mid Cap distribute neatly under this profile.
This means that the effectively contestable free float is structurally below fifty percent. A hostile takeover, by definition, must be able to reach control by extracting consent from the market — but if half of the company is already locked under pact, the takeover is simply mathematically impossible.
The structural difference with London is clear: in the average FTSE 100 issuer, the percentage of capital held by the first shareholder does not exceed seven to ten percent. Free float is almost always above eighty percent. Hostile takeovers are mathematically possible — and therefore, periodically, they happen.
Factor 2 — Shareholders’ pacts
Shareholders’ pacts are a legitimate and widely used instrument. Their technical function is to coordinate the vote of a block of shareholders, typically around a controlling family or a group of strategic cross-holdings.
The systemic effect, however, is twofold. On one side, they consolidate existing control — good governance if the controlling shareholder is competent, mediocre if not. On the other, they block the discipline of the market: management does not live under the threat of a hostile takeover, and therefore does not face the external pressure that historically improves managerial discipline.
Henry Manne, in 1965, formalised the concept of the “market for corporate control” as a structural corrective to managerial inefficiency. The thesis was simple: if boards protect mediocre management, someone will buy the company hostile and replace them. The threat disciplines the present. In Italy, where the threat is structurally absent, the corrective is missing.
Factor 3 — Golden power
Legislative Decree no. 21/2012 and subsequent amendments have significantly extended the perimeter of golden power: energy, transport, communications, defence sectors, but also critical technologies, financial infrastructure, and a series of assets considered of strategic national interest. Annual notifications to the government for transactions subject to review went from a few dozen to over five hundred per year in the past decade.
The effect on hostile takeovers is one of implicit filtering: even operations theoretically possible from an economic standpoint become politically impractical. No foreign fund — and rarely even an Italian one — embarks on a hostile takeover of a target that could fall within golden power, because the risk of governmental veto adds to economic complexity an unsustainable institutional uncertainty.
The extension of golden power had defensible policy motivations — protecting truly strategic assets from aggressive geopolitical acquisitions. It has, however, the side effect of blocking the market for corporate control even on targets where the real strategic motivation is weak.
Factor 4 — Culture
The fourth factor is the least technical and the most decisive. Italian industrial culture treats the hostile takeover as an act of brutality — something Anglo-Saxon, foreign to the etiquette of the Italian banking-industrial world.
An Italian PE fund launching a hostile takeover today on a mid-cap listed company would risk isolation from the system: banking sponsors would withdraw support, institutional LPs would refuse to sign, the doors of the inner circle would close. Reputational cost is high, reputational gain is low. The incentive asymmetry is clear.
The few hostile takeover attempts recorded in recent history — even those that were economically rational — generated systemic reactions so harsh as to make the next operation far more expensive. Cultural selection has worked: today no one tries.
What we are losing
A blocked market for corporate control produces four measurable systemic costs.
- Lower valuations — limited free float and absence of takeover scenarios depress multiples relative to comparable markets. Mediobanca, the Bank of Italy and several academic papers document the “Italy discount” relative to analogous companies listed in London or Frankfurt.
- Reduced liquidity — international institutional investors allocate little capital to Piazza Affari due to the difficulty of building and unwinding relevant positions without moving the price.
- Structurally lower managerial discipline — listed Italian management does not live under the threat of a takeover, and therefore is not disciplined by the external pressure that characterises London, New York, and partly Frankfurt.
- Sub-optimal capital allocation — sectors where the family entrepreneur no longer has a long-term vision continue to be managed by the family, instead of transferring to better-suited operators, due to the absence of automatic mechanisms of control transfer.
These are diffuse costs, scarcely visible day by day, but cumulative. The long-term performance differential between Piazza Affari and comparable markets has many causes; the rigidity of the market for corporate control is one of those we discuss the least because it touches consolidated interests.
What could unlock the market
Four levers, each with significant political costs, could gradually reopen the market for corporate control.
- Full transparency of shareholders’ pacts with mandatory triennial renegotiation visible to the market — reduces informational rent-seeking
- Restriction of golden power perimeter to truly strategic sectors, with objective criteria and certain timelines — reduces the institutional uncertainty that today discourages every potentially sensitive operation
- Self-discipline code on anti-takeover defences with clear limits on poison pills and multiple-voting clauses — reduces regulatory arbitrage
- Tax incentives for the split between ownership role and managerial role in listed family businesses — separates control from management, a necessary condition for the market for corporate control to function
None of these levers is popular in Italy. All four touch powerful vested interests. The debate on the market for corporate control, for this reason, has never truly taken place in Italy.
FAQ
What exactly is a hostile takeover?
It is a public takeover bid on a listed company in which the target’s board of directors recommends that shareholders do not tender. Technically the procedure is the same as a “friendly” bid; only the board’s orientation changes. In the presence of a hostile bid, board defences (poison pills, search for a white knight, regulatory challenges) come into play.
What have been the historic Italian hostile takeovers?
Landmark cases are historically few: Olivetti-Telecom (1999) as an “assisted” climb; certain banking operations of the 2000s (Unipol-BNL, BPI, Antonveneta) with controversial outcomes on regulatory grounds. More recently, some Mid Cap offers classifiable as hostile failed rapidly through defensive recomposition of control.
Is golden power a problem for foreign investors?
The problem is not golden power in itself — it exists in all developed democracies. It is the breadth of the perimeter and the discretion of decisions. When non-strategic sectors fall within notifications, and when evaluation criteria are not predictable, the foreign investor internalises the risk as permanent and disinvests upstream.
Why do Italian families prefer locked control?
Because the family, historically, has been the only long-term structure capable of protecting the company from political cycles, banks, and supply chain crises. Locked control was a rational protection mechanism in a historically weak institutional context. The problem is that the context has changed — but the protection structures have remained, and now produce more costs than benefits.
To go deeper
To discuss a specific scenario on governance, capital structure, or pre-takeover defences, book a confidential preliminary conversation.
