Any UK partners wanting reassurance as to why management has been pouring their hard-earned profits into acquiring or expanding an Italian presence need look no further than this year’s M&A league tables.
While the UK continues to stand out as the most active market, Italy is not far behind. According to Mergermarket figures for the first three-quarters of 2003, the UK racked up a total of 572 deals (including lapsed and withdrawn bids), followed by Germany on 273 and Italy on 201. France and Spain totalled 183 and 140 deals respectively.
Francesco Gianni, managing partner of Gianni Origoni Grippo & Partners, told The Lawyer: “Italy is suffering from the slowdown of the economy less than other jurisdictions for a few reasons. There are certain companies in Italy that need restructuring because of indebtedness. In addition, there are still consolidation plans in Italy. Companies haven’t yet reached the dimensions they need to be competitive on a European-wide basis.”
Based on value, Italy’s performance was even stronger, with deals worth a total of £44bn compared with the UK’s £56bn. Behind Italy were Spain on £36bn, Germany on £27bn and France on £21bn.
But a word of caution: remarkably, the high value of Italy’s M&A activity this year is largely down to just one company – Telecom Italia – and the complex and contested project to shorten the much criticised chain of holding companies that controls it. To a lesser extent, Fiat also buoyed Italy’s deal value figure with a series of asset sales, including its insurance unit Toro.
Also striking about the Italian M&A rankings is the dominant position of domestic firms. Whereas in other jurisdictions, such as France and Germany, the top spots are dominated by magic circle and US firms, in Italy foreign entrants have largely failed to attract or, in the case of Clifford Chance and Simmons & Simmons, to keep Italian stars.
At the top of the Italian rankings are Gianni Origoni, Bonelli Erede Pappalardo and Chiomenti, all of which were involved in the Telecom Italia restructuring. Allen & Overy (A&O), which advised the banks on Telecom Italia, is a notable exception. It worked on 20 deals, and on deal value moved up from seventh place in 2002 to fourth place.
Bonelli partner Roberto Cera commented: “A&O is taking a good position in the Italian market, more so than other firms such as Clifford Chance or Freshfields Bruckhaus Deringer, which are a little less present and involved.”
Clifford Chance fell out of the top five based on value this year, but did perform well on volume, racking up 22 deals.
Cera said: “The Italian firms don’t have the entire market, but it’s more difficult for the foreign firms to compete on a very domestic deal.”
Three less familiar entrants to this year’s Italian top ten are Davis Polk & Wardwell, Fried Frank Harris Shriver & Jacobson and Wachtell Lipton Rosen & Katz. All three gained places when brought in to advise on US law aspects on Telecom Italia.
Similarly, Studio Vitali Romagnoli climbed from 37th to sixth place after being brought in to advise on tax in the Olivetti-Telecom Italia merger.
The high ranking of M&A boutique Giliberti owes much to its role on the Seat Pagine Gialle Yellow Pages sale, on which it teamed up with Dickson Minto to advise the winning bidder, a consortium comprising CVC, Permira, BC Partners and Italian private equity group Investitori Associati.
So can recent levels of activity be sustained in Italy?
“The number of deals may not change significantly, but there’ll be a major difference in terms of value because the recent figures have been driven by the Telecom Italia deals,” said Gianni.
Any hopes of an imminent deal of Telecom Italia proportions seem to be pinned on privatisations, which may or may not take place in 2004 and rumours about further mergers in the banking sector, with Capitalia attracting the bulk of press speculation.
|Italian transactions exceeding £3.5m (1 January-30 September)|
|2002||2003||Law firm||Value (£bn)||No of deals|
|9||1||Gianni Origoni Grippo & Partners||29.82||26|
|1||2||Bonelli Erede Pappalardo||20.57||19|
|4||3||Chiomenti Studio Legale||20.42||29|
|7||4||Allen & Overy||18.86||20|
|78||5||Fried Frank Harris Shriver & Jacobson||14.30||2|
|109||6=||Davis Polk & Wardwell||14.07||1|
|37||6=||Studio Vitali Romagnoli Piccardi e Associati||14.07||1|
|98||6=||Wachtell Lipton Rosen & Katz||14.07||1|
|48||7||Skadden Arps Slate Meagher & Flom||12.24||11|
|14||10||Giliberti & Associati||4.23||4|
|Top Italian deals (1 January-30 September)|
|Olivetti acquisition of remaining interest in Telecom Italia||Gianni Origoni; Chiomenti; Bonelli; Davis Polk; Vitali Romagnoli; Fried Frank; Skadden; Wachtell Lipton||13.61|
|Telecom Italia auction of Seat Pagine Gialle||Gianni Origoni; Giliberti with Dickson Minto; Ashursts; Clifford Chance; Skadden; Linklaters||2.64|
|Pirelli & C Accomandita acquisition of remaining interest in Pirelli||Bonelli||2.15|
|De Agostini acquisition of Toro Assicurazioni from Fiat||NCTM; Studio Carlo D Urso; Bredin Prat; Grande Stevens; Studio Legale Tributario di Tanno||1.63|
|Schemaventotto acquisition of remaining interest in Autostrade||Bonelli; Gianni Origoni||1.37|