Pulling the strings from behind the scenes was the puppet master of Italian finance: merchant bank Mediobanca. SAI, which happens to be a shareholder of Mediobanca, started things off by offering a premium for the 29 percent of La Fondiaria held by utility Montedison, then part of the Mediobanca nexus of companies. But to the surprise of cynics, Italian regulators blocked the deal, saying that SAI and Mediobanca were colluding to acquire La Fondiaria and thwart an M&A rule that requires a bidder for 30 percent or more of a company to offer a like premium to all its shareholders. Shareholder groups hailed the decision.
Mediobanca is legendary at deal making for a reason, however. It purportedly helped devise a new stratagem. SAI’s financial adviser, J.P. Morgan, would team up with other banks and financier Franceso Micheli to buy the Montedison stake -- at a 56 percent premium -- and later sell it to SAI for that same price. SAI, meanwhile, would indemnify these “white knights” against loss through puts and calls. As for La Fondiaria’s other shareholders, they’d have to settle for a far less lucrative share swap. In the end, SAI got La Fondiaria -- and shareholders got mad.
Now comes the next plot twist. Umberto Mosetti of shareholder-rights consulting firm Dem- inor plans to file a lawsuit this month seeking about E100 million ($108 million) in damages on behalf of aggrieved investors. The 37-year-old Mosetti, a onetime Morgan Stanley banker who teaches at the University of Siena, proclaims that “even though [regulator] Consob did not undo the merger, the finding that SAI and Mediobanca acted in concert means we’ve got a very strong case for civil damages.” U.S. firms Elliott Associates, Oyster Fund Management and P. Schoenfeld Asset Management have joined the suit, along with ten Italy-based money managers.
It could take years to resolve. But then, as Aeneas’s father, Anchises, told him, it is the duty of Romans to “wage war until the haughty are brought low.”
