Montedison defence boosted by proposed law change

Montedison’s attempt to prevent the Fiat-EdF Italenergia taking control of the power group at next months shareholders meeting was boosted by the Italian government’s decision to press ahead with legislation which will have the effect of reducing Italenergia’s voting rights from 52 per cent to 44.5 per cent. As a result, Fiat and Electricit௿½e France may be forced to raise their E5bn bid for Montedison.

The lower house’s industry committee on Wednesday approved legislation which had been tabled before Fiat joined forces with French State-owed electricity group EdF. The bill is expected to be debated on Friday and put to the vote by next Tuesday. Government and opposition leaders appeared to be backing a version that would reduce Italenergia’s voting rights.

“Government told the committee that this bill will limit Italenergia’s vote to 44 per cent,” said Sergio Gambini, a deputy on the industry committee. “This will no doubt lead to a long legal fight from Fiat but this decree is necessary. It’s a question of reciprocity with France. Right now Italy is on the defensive so long as EdF is not open to take-over and the French electricity market is closed to competition.” The bill follows an emergency decree passed by the government after EdF disclosed in May that it had accumulated 20 per cent of Montedison, which owns Italy’s second-largest power generating company.

Fiat and EdF, the French state-owned electricity utility, announced on July 2 that they had formed Italenergia and would offer 2.82 Euro a share for the 48 per cent outstanding. They requested a shareholders’ meeting, to be held on August 9, where they were expected to use their majority to vote out Montedison’s board of directors and top executives, who are hostile to the bid.

To form Italenergia and reduce EdF’s stake in the consortium, EdF sold half of its 20 per cent Montedison stake to Fiat, giving EdF 18 per cent of Italenergia. Fiat owns 38.6 per cent and three Italian banks together own 23 per cent.

Montedison’s management is fighting Fiat and EdF with the support of Mediobanca, the investment bank that owns 14.5 per cent of Montedison and whose allies own at least 20 per cent more. If Italenergia’s voting rights are reduced, Montedison could attempt to stop Italenergia from winning the majority of shareholder votes needed to remove the board, which is made up of members hand-picked by Mediobanca.

It emerged yesterday that Montedison was in talks to sell Ausimont, its chemicals unit, to Solvay of Belgium. Italenergia is interested only in Montedison’s two energy units, Edison and Sondel, but the move could give Montedison cash to help fight off Italenergia.

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