La Fondiaria Shareholders’ Meeting May Be Postponed

April 30, 2002

From news reports it appears likely that today’s shareholders’ meeting of Italian insurer La Fondiaria will probably be postponed until the end of May due to the lack of a quorum.

The meeting promised to produce some fireworks. Fondiaria has been rejecting a takeover attempt by rival Italian insurer SAI. Last August it obtained a ruling from Consob, Italy’s securities market regulator, that required SAI to make its tender offer to all company shareholders, rather than exercising its option to purchase 29 percent of Foindiaria’s shares and voting them with other large shareholders, notably the Italian financial conglomerate Mediobanca, to take over the company.

SAI then transferred the option to a group headed by JP Morgan Chase, but soon after the two concluded a call/put arrangement for SAI to reacquire the shares any time over the next two years. Fondiaria management promptly went back to court, and to Consob to prevent the Morgan group from voting the shares at the annual meeting. Presumably they would have used their votes to install new management more favorable to the merger with SAI.

Postponing the meeting will give Consob more time to rule on Fondiaria’s complaint. If it finds in favor of the company, it could order Morgan to make the same offer to all shareholders as it required of SAI. Most analysts have concluded that the terms of that offer are around $1.2 billion more than La Fondiaria is actually worth.

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