Draghi Aims for Tighter Control of Italy’s Takeover Defenses
(Bloomberg) -- Prime Minister Mario Draghi is seeking to improve and streamline Italy’s vetting of foreign takeover bids at a time of heightened competition between China and western countries -- and he wants to wield more power in the oversight process.
An inter-ministerial committee that manages the state’s use of so-called Golden Power legislation to safeguard key sectors is now in Draghi’s cross-hairs, people familiar with the matter said.
The changes the premier is considering would give him more direct control over vetting deals in the future, said the people, asking not to be named because the plan isn’t final. A spokesman for Draghi declined to comment.
Since taking office in February, Draghi has already made use of Golden Power laws to stop or dissuade Chinese investors from gaining a foothold in Italy. His government blocked a Chinese takeover of LPE SpA, a small semiconductor firm based near Milan, and reportedly intervened to scuttle the sale of the Italy-based Iveco SpA’s truck and bus unit to China’s FAW Group Co.
The Golden Power legislation can be used to block foreign takeovers or exercise oversight on foreign owners in any industry the government deems to be a “strategic.” The committee is empowered to recommend that the government block deals or impose conditions for approving deals, such as maintaining production in Italy.
Rome’s recent shift toward a more pro-European and pro-Atlantic foreign policy has led to a flood of new work for the committee, slowing decision-making and leading some possible buyers to be deterred from finalizing deals in the country, the people said.
“We have seen a pick-up in the workload on foreign investments, with more stringent oversight by the Italian government, asking for more information on almost every deal,” said Giulio Napolitano, a partner at Chiomenti law firm in Rome. “Potential investors are starting to complain about the paperwork process and timing.”
The shake-up would also mean a shift from reacting to foreign bids to preemptive state engagement, with the government conducting a dialogue with companies in industries that are deemed strategic, according to the people.
The Draghi administration wants potential foreign investors to understand the country is open to investment but will not tolerate predatory tactics, particularly from China, government officials said. The new approach could mirror the U.S. Committee on Foreign Investment, which was revamped in 2018, they said.
Efforts to streamline the process will also be paired with moves to bring more sectors under government oversight, according to the people. Already this week, Rome broadened its definition of what cybersecurity companies it will deem as strategic.
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