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Due diligence requirements
What due diligence is necessary for buyers?
In a typical M&A transaction, the buyer performs due diligence in relation to the following:
- financial matters;
- technology and intellectual property;
- customers and sales;
- material contracts;
- employment and management;
- antitrust and regulatory requirements; and
What information is available to buyers?
In a private M&A deal, the buyer may gather information on the target during its preliminary contact or may otherwise be allowed to carry out due diligence on the target following the execution of a non-disclosure agreement.
In a public M&A deal, should a hostile bid occur, the bidder is not usually allowed to conduct any due diligence and can provide its offer only based on the information publicly available, as set out in the Financial Act and its implementing regulations.
Conversely, in a non-hostile takeover, bidders can conduct due diligence before the acquisition of a controlling stake or the launch of a public tender.
What information can and cannot be disclosed when dealing with a public company?
The Financial Act and its implementing regulations provide for a complete set of information to be communicated to the public by Italian listed companies – for example:
- the target’s annual, semi-annual and quarterly financial statements;
- reports on the shareholders’ structure and corporate governance;
- information documents relating to shares plans for managers and employees;
- information documents relating to main corporate transactions; and
- shareholders’ agreements.
How is stakebuilding regulated?
Under the Financial Act and Italian Stock Exchange Commission Regulation 11,971/1999, ownership disclosure duties apply when an investor, either directly or indirectly, reaches 3% of the voting shares and a set of additional higher thresholds. If the issuer is a medium-sized enterprise, the threshold is set at 5%.
If the bidder decides to build up a stake before launching a tender offer, it must comply with the specific disclosure obligations provided by Italian law.
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