Italy Moves to Protect Firms From Foreigners' Hostile Bids

Fresh from preventing Alitalia being taken over by the French and Dutch, the prime minister, Silvio Berlusconi, is acting to ensure no other Italian company falls into foreign hands at the bargain prices available on the Milan stock exchange.

On Wednesday night, Berlusconi declared in Brussels that Consob [Italy's stockmarket regulator] and the treasury were working to change the rules. He said he had information on an influx of cash from sovereign funds, particularly those belonging to oil-producing countries.

The finance minister in Berlusconi's right-wing government, Giulio Tremonti, said amendments would be inserted into two decrees approved by the government and intended mainly to bolster Italy's banks. According to reports yesterday, the new measures would lower the 2% threshold at which equity holdings in a company have to be made public and suspend a rule that requires companies to get "poison pill" and other defenses approved in advance by a meeting of shareholders. Tremonti said the measures would be "within the European framework".

The government's initiative won it rare plaudits from trade unionists in a society where inward investment is widely regarded as a menace. Berlusconi made defence of the Italianità (Italianness) of the economy a centerpiece of his successful campaign to be re-elected this year.

Renata Polverini, general secretary of the UGL trade union federation, said: "The government does well to prepare legislative initiatives to ... protect our firms."

The earliest warning was sounded on Tuesday by Lamberto Cardia, Consob president. In evidence to the senate's finance committee, he said the collapse in share prices had created "new worries" about hostile takeover bids.

However, he testified that most of the selling on the Milan exchange had been by foreigners or their agents.

Berlusconi, by contrast, said he "had information from oil-producing countries, which have ample funds and are making huge acquisitions on our markets". He said: "First, I got information from journalistic sources in Arab countries. Then, I got confirmation from the oil-producing countries' governments themselves.

"Many Italian companies have a share price that does not correspond to their value, so there are excellent opportunities for those who may wish to make hostile bids."