Impregilo’s meeting (hopefully) marked a turning point for the Italian market

Posted on July 23, 2012

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The Impregilo’s shareholders meeting was requested by Salini, one of the two main shareholders with almost 30% and main competitor of the company, asking for the removal of the entire Board of Directors. The meeting was originally called on July 12th, but the other major shareholder (Gavio Group), who also holds almost 30%, proposed at the meeting to postpone everything until September 3rd. As the new motion was not included in the proxy forms signed by the solicited shareholders, the Chairman of the Board, Fabrizio Palenzona, decided to not count their votes. The controversial decision of the Chairman (who was appointed by Gavio on June 11th) would have cancelled all proxies gathered by the two contenders, imposing a new proxy solicitation during the month of August (when almost all Italians are on holidays). On July 16th, the Court of Milan considered such decision as irregular: all votes gathered during the proxy solicitation should be counted on all items, even on eventual new organizational motions.

The neo-appointed Chairman Palenzona, by deciding to exclude from voting hundreds of proxies, attempted to save “in extremis” the interests of the shareholder that appointed him (Gavio), of the bank where he is Deputy Chairman (UniCredit, that is one of Gavio Group’s major creditor) and of the bank where he served as Director until a couple of months ago (Mediobanca, that is the other Gavio’s major creditor, where both Gavio and UniCredit are relevant shareholders through the shareholder agreement and that is the major shareholder of UniCredit…).

The day after the contested decision, the Chairman of the Board of Statutory Advisors, Mr Giuseppe Levi, resigned from his office for “other personal commitments”. During the meeting the Salini’s legal advisor solicited his intervention to block the Palenzona’s decision. Anyway, the residual voting shareholders rejected the Gavio’s motion and the meeting was postponed for only 5 days.

The Impregilo’s meeting was finally held on July 17th, under the extraordinary supervision of some police officers. Shareholders voted at 51.01% for the removal of the Board: as expected, the proxies that Mr Palenzona excluded from voting on July 12th made the difference, with 1.6% more votes gathered by Salini through the proxy solicitation.

The relevance of the voting result goes beyond the attempted infringement of the voting rights (that occurred under the supervision of Consob’s representatives), beyond the real reasons of the dispute (Salini is the major Impregilo’s competitor in the construction business and he wants to merge the two companies) and the legal aspects (regarding the removal of the Board and supposed connections among shareholders): for the first time ever, small shareholders had a central role in deciding the future of an Italian large cap, overcoming the system of conflicts of interest that controls large part of the Italian market.

The proxy solicitation procedure has been recently simplified by the Legislative Decree n.27 of 2010, transposing the European Shareholder Rights Directive 2007/36. For the first time since the new rules have been established, the proxy solicitation proved all its power in involving all shareholders in strategic decisions at a large cap (so far, the solicitation tool was used only at small caps such as Aedes, Cape Live, SSBT and others). The voting margin of 1.01% at the Impregilo’s meeting, made of hundreds of proxies, proved that if small shareholders are solicited (and hopefully duly informed) can gain enough strength to equal large and powerful institutions. Some banks voted with Mediobanca for Gavio, such as Veneto Banca (1.98%) and Banca Carige (1%), that usually are not among the most active investors.

The “Mediobanca’s system”, involving large part of Italian listed companies through a web of interlocking holdings and cross memberships, suffered a first relevant defeat. The same result was not achieved during the battle over the merger between the two insurers Unipol and Fondiaria-Sai, where the conflicts of interest of Mediobanca and UniCredit (the latter is relevant FonSai’s shareholder, with almost 7%, and both are the main creditors of the Group) include also the main competitor Assicurazioni Generali. The private equity fund Sator Capital and the holding company Palladio tried to interfere by presenting an alternative rescue plan for FonSai, but the management of the company refused their proposal, that was not even subject to be voted by the minority shareholders. The article published by Hester Plumridge for the Wall Street Journal on July 12th, FonSai Shareholders Deserve Better, gives a short but very accurate analysis of the situation.

Impregilo is still in a very delicate situation, with two rival shareholders at 30% each and none of them willing to launch a public tender offer. Furthermore, the battle is far to be over and it will likely be decided in the courts (Gavio Group filed a complaint to the Italian market authority Consob claiming that Salini acted in concert with the other relevant shareholder Amber Capital). In any case, the Impregilo’s meeting results go beyond the individual company, launching clear indications for the entire Italian market: minority shareholders seem to be gaining enough consciousness and strength to let us imagine (and hope for) a forthcoming Italian “shareholders’ spring”.

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Posted in: Boards, News