The Plan to Stop French Raiders Buying Up Italian Businesses

  • French investors brace for tougher Italian stance on companies
  • Vivendi to STMicroelectronics could bear the consequences

In the corporate suites of Milan and Rome’s corridors of power there’s a new resolve: stop French raiders from buying up Italian businesses.

After a spate of Italian takeovers by French competitors, some of the brewing resentment in the country will be felt by Vivendi SA in its fight for power at Mediaset SpA and Telecom Italia SpA, said people familiar with the matter. French companies announced $41.8 billion in Italian takeovers in the last five years, including Essilor International SA’s recent accord to buy Luxottica and Amundi SA’s acquisition of UniCredit SpA’s Pioneer Investments, according to Bloomberg-compiled data, six times Italian purchases in France.

Italian authorities are focusing their efforts on the few areas in which they can intervene, using regulatory pressure or board-seat influence to curb the French corporate offensive, the people said, asking not to be named discussing private considerations. For their part, Italian executives like Intesa Sanpaolo SpA Chief Executive Officer Carlo Messina are being more vocal about opposition to their neighbor’s onslaught.

“We are a company that speaks Italian, not French, and we are defending our Italian-ness,” Messina said at an event on Jan. 26 in Turin. “Someone who defends Italian-ness and does it in French makes me laugh.”

Messina’s bank is mulling a merger with insurer Assicurazioni Generali SpA. His comments came after Generali named a Frenchman at its helm, and amid speculation French insurance giant Axa SA is a possible rival Generali acquirer.

Billionaire’s Ambitions

In the near term, the emerging nationalistic streak may get in the way of French billionaire Vincent Bollore’s ambition to create a European media giant. Bollore is the biggest shareholder of French media company Vivendi SA, which is the largest holder of Telecom Italia and the second-largest owner of Milan-based Mediaset. In the past year or so, Bollore’s fight for power at Telecom Italia and Mediaset has raised Italian ire.

At the end of last year, a memo was circulated among Italian government officials about the possibility of using veto power against Vivendi in case of a potential takeover of Mediaset, a person familiar with the matter said.

There was also talk of extending this to Telecom Italia if there was evidence that the French company would use its stake in the telecommunications company to influence the Mediaset situation, the person said. The Italian competition watchdog Agcom may also weigh in, the person said. Vivendi declined to comment. The Italian government maintains that it doesn’t interfere in private sector deals.

The French finance ministry said in a statement that the string of recent acquisitions “makes sense and don’t amount to any desire on the part of France to take control. Italians are also investing in France, notably in ship building at Saint-Nazaire.”

Succession Battle

Tensions have also emerged at chipmaker STMicroelectronics, with disagreements for over a year on the successor to CEO Carlo Bozotti. France and Italy each holds 27.5 percent in STMicroelectronics and have board representation.

France is stepping back from pitching more potential candidates after its earlier suggestions were rejected, people familiar with the deliberations said. With the company’s operations improving and shares more than doubling in the past year, France is toning down the battle.

In the cases related to Bollore and STMicroelectronics, agreements are likely to eventually be reached, people involved in the talks said. Italy’s weak, referendum-defeated government, poor management at some companies and a wobbly banking system are helping French companies seize opportunities. 

"There is a natural tendency for French companies to take over Italian ones as France is seen by investors as a more stable country and better organized to attract headquarters of global companies as shown by the latest Essilor-Luxottica deal," said Giuseppe Berta, a professor at Bocconi University in Milan.

Alitalia Experience

Also, past experiences of trying to keep local companies from slipping into French hands have left scars. Alitalia SpA was bailed out by Italian investors in 2008 with talk of national pride and love of the country by then Prime Minister Silvio Berlusconi, leaving by the wayside an approach by Air France-KLM. The Italian airline ended up selling a stake to Etihad Airways PJSC years later. The beleaguered flag bearer continues to bleed money.

Still, the Italian government doesn’t want to be seen as giving away the country’s family jewels too easily. Like other countries in Europe, Italy is seeking to strengthen the state’s hand over some foreign investment deals, especially from China. 

Carlo Calenda, Italy’s Economic Development Minister, told a lower house committee in Rome on Jan. 31 that he was working with Sigmar Gabriel, Germany’s Vice-Chancellor, on proposals to submit to the European Commission “to reinforce the golden power linked to the purchases of strategic firms by countries, especially when they are not market economies.”

That would give the state a veto over transactions involving strategic assets, among them the telecommunications industry, including Telecom Italia. Calenda wants to extend the scheme to other sectors.

“We are also seeking French convergence,” Calenda said. While he said he supports foreign investment, there are “cases in which a technology transfer can be at risk.”

Before it's here, it's on the Bloomberg Terminal.