WHAT GOES AROUND COMES AROUND The story of the first hostile takeover bid on the Italian market. The crucial role of communication.
That Saturday in mid-October 1993 marked a turning point in the history of the Italian financial market: the first hostile takeover bid was launched.
The bidder was a bank that today forms a significant part of the Banco BPM group, now the “victim” of a non-agreed offer: Banca Popolare di Verona.
The target was a bank that dominated the wealthy provinces of Reggio Emilia and Modena: Banco San Geminiano e San Prospero. This institution was the result of a merger between two historic entities founded in the late 19th century, Banco San Geminiano of Modena and Banco San Prospero of Reggio Emilia.
Banco San Geminiano e San Prospero was a classic local bank, as prosperous as the economy of its home provinces, and closely linked to the Catholic world. For instance, it was customary to gift the bank's shares at First Communion. Yet its governance was distinctly secular, bringing together leading industrial groups from the area—Barilla, Ferruzzi, Marazzi, Panini—many of which were bound by a syndicate pact governing the bank.
However, this giant had a weak governance structure, made up of financially solid shareholders with divergent interests. This weakness allowed Banca Popolare di Verona to strike a deal with certain industrial members of the pact, creating a governance crisis for Banco.
But this initial victory also proved to be the predator’s original sin: launching a takeover bid that favored large shareholders over the 90% of smaller ones was a grave mistake. It allowed Banco to organize a robust and well-founded defense, buying precious time. In this context, communication played a decisive role.
Many prominent entrepreneurial shareholders found their breakfast interrupted that Saturday morning by an obscure page in Il Sole 24 Ore and local newspapers describing an offer to buy their shares. But these shareholders neither needed the money nor intended to lose control of "Alcatraz," the nickname for Banco's new headquarters just outside Modena.
“So? What happens now?” they wondered. Nobody knew—it was an unprecedented situation.
Schroders, the investment bank, stepped in to clarify matters. Having dealt with numerous similar operations on international markets, Schroders knew exactly what to do. They simply called Banco’s leadership to explain the situation and advise on the best course of action.
They also stressed the critical role of communication in such scenarios, emphasizing the need for swift, accurate, and consistent responses to the market. For a bank with a widespread shareholder base like Banco, communication had to transcend technicalities and become universally understandable.
The next call was to Luca Barabino, engaging Barabino & Partners, already the leading financial communication agency in Italy. In cases like this, weekends and holidays don’t exist; the work begins immediately. After all, the most compelling financial deals often unfold outside trading hours.
For over a month, “Alcatraz” became my second home, commuting daily from Milan to Modena in my trusty Fiat Uno.
Thinking about how financial communication has evolved since then makes me laugh. Today, the focus is on fair value, but I’ve also worked even preparing salami sandwiches to keep Banca Popolare di Crema’s shareholders from going home for lunch, thus protecting the assembly quorum from “external invaders.”
In Modena and Reggio, barricades were raised, involving everyone—even the bishops. It’s said that some Sunday sermons included appeals to resist the offer.
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Every day, newspapers featured soccer-style coverage: one half-page for "Modena Updates" and the other for "Verona News." Soccer captivates more than anything else, while we worked tirelessly to explain through newspapers and local TV why the offer was unacceptable.
The first mandatory report on the bid’s progress revealed participation levels lower than Milan’s telephone area code. It was published with a small ad in the classifieds section of local newspapers, but we intercepted it and turned it into another source of embarrassment for Banca Popolare di Verona.
The bidder was forced to revise the offer terms twice, each time improving them. The second revision proved decisive, offering equal treatment to both large and small shareholders. “For the first time, a partial takeover bid has been transformed into a total one for minority shareholders,” noted Panfilo Tarantelli, CEO of Schroders, in an interview with Corriere della Sera.
That morning, Schroders explained to the wealthy industrial shareholders that their mandate was to represent all Banco San Geminiano e San Prospero shareholders and that the revised offer was advantageous for everyone.
At that point, there were tears, but the resolution passed.
The rest is history and a source of pride.
Federico Pepe, General Manager of Banca Popolare di Verona, explained the strategic rationale behind the operation to Banco’s board and then asked to meet “those who had caused him the most trouble” (using much more colorful language). He came into our room and congratulated us on our work.
Federico Pepe was a great banker; a few months later, he was called upon to save Banco di Napoli from default.
And so I found myself on Via Toledo—but that’s another story.
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