La Fondiaria, Italy’s 4th largest insurance company, has filed suit against rival insurer SAI, JP Morgan Chase, Commerzbank and several other shareholders in an attempt to keep them from voting their shares at the annual shareholders meeting, scheduled for April 30.
The action is the latest round in an ongoing takeover battle. Fondiaria is resisting the attempts of SAI, which had agreed to purchase a 29 percent stake in the insurer and is backed by Italy’s powerful financial conglomerate Mediobanca, to force it into a merger.(See IJ Website Feb. 12, 6 & 4)
Consob, the Italian financial market regulator, ruled that due to its ties with Mediobanca, which owns 13.8 percent of Fondiaria, SAI had to make an offer for all outstanding shares, which made the acquisition too expensive.
It subsequently transferred its purchasing rights to a group headed by Morgan and Italian financier Francesco Minelli, but shortly afterwards revealed that it had reciprocal call/put options to reacquire the shares.
Fondiaria has alleged that the purchasers are in fact acting in place of SAI, and that if they are allowed to vote their shares they will pace directors on its Board who favor the merger with SAI.
Other shareholders have asserted the same argument, and have asked Consob to enforce its original order that the purchasers make an offer on the same terms to the rest of Fondiaria’s shareholders. If they’re forced to do that, they could end up paying over $1.4 billion more than its current market value.