MERGERS AND ACQUISITIONS
prepare for it. That’s the reason why we have great advisers. They find a solution if something happens and that is also a sort of certainty.
case, the main difficulty in the Italian market is that they will link the pre-approval to an investigation into the suitability of the owners, with reference to the chain of control. We have also anti-mafia control, because our gaming regulation is strictly linked to criminal law. Our regulator IDM looks at the license, they look at the license holders in a way that is quite close to a public prosecutor. The interpretation of law is much more substantial than formal. Normally we deal with this condition preceding the closing. But the main concern, is that if you look at the transaction from the buyer’s point of view, he wants to be sure he will own what is paying for. But if you look at the transaction from the seller’s perspective, he does not want to be affected by a lack of compliance on the part of the buyer. He has spent several months on due diligence, maybe the authority may be biased, our interpretation may be biased, because they are not totally sure the chain of control is clear enough. So we try to deal with different interests. There are several instruments to consider. You may agree on an escrow agreement, you may agree on an escrow amount. You may postpone the payment. But another story starts again, where, for example, you need to fund this kind of deal. You don’t use equity, you use money that has to be borrowed from a bank, so you need also to involve the bank. The bank places conditions in order to release a payment. This is why this kind of transaction, even if they are only at a private level or public level, are quite complex to deal with, especially if other jurisdictions are involved. I would say that the pre-event conditions should guide the agreement, because you cannot accept that in other jurisdiction, where a deal is totally effective, and then you don’t get a pre authorization. In that situation you may have to reduce the purchase price, or to terminate the deal completely. The approach of the regulator in Italy is more substantial than formal. If you intend to carry out a certain transaction it is advisable to contact them in advance. With sophisticated operators they have a compliance department, a compliance officer that has the skills and competence to update their internal records. But you require Italian lawyers to understand
Bringing a local perspective
Andrea Marchetti is a corporate and M&A partner at WH Partners Italy. He explains where to start and what is required to get international deals done in his market. As a corporate lawyer, if I negotiate a master agreement under which several subsidiaries operate in multiple jurisdictions, the importance of the Italian market is relevant in accordance with the agreed purchase price. If you have a huge percentage of the purchase price linked to the Italian market then in that case, the entire transaction will be subject to one condition being met: to get the pre-approval. This principle has to be clarified within the context of the transaction. If we have a deal between private companies then it is relatively simple. Each knows his market and can deal with the compliance requirements. What if the regulatory market is involved? It concerns not only trading listed shares but also if I try to sell or transfer shares that are not within the stock float or the stock float. In such a
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IMGL MAGAZINE | DECEMBER 2024
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