The value of cross border M&A activity in Italy broke records in 2015, with numerous high profile transactions contributing to the $50bn worth of deals completed throughout the year. The stabilising economic climate has undoubtedly added to the upsurge in M&A activity in the European nation over recent years, and now, even in spite of heightened uncertainty regarding the country’s impending constitutional referendum, sentiment in the legal profession remains positive.
So far 2016 has been a strong year for the Italian M&A market. According to KPMG, 298 deals were recorded in the first half of 2016 which had a total value of a €25.3bn, a 47.1% increase year on year. Though M&A deals in the nation span a wide range of sectors, a significant amount of activity in 2016 has been focused on banking mergers and privatisation of public-owned companies.
Italy appears on A.T. Kearney’s Foreign Direct Investment (FDI) Confidence Index for the third consecutive year, ranking 16th, featuring above other European nations such as Ireland, Sweden and Norway (which were placed 22nd, 23rd and 25th respectively.) China remains increasingly interested in the country, with its national chemical firm ChemChina winning a bid to buy Italian tyre maker Pirelli for $7.9 billion in July 2015, the largest Chinese outbound M&A deal in the EU on record.
M&A activity has also been boosted by a number of bills introduced by Matteo Renzi’s Government which aim to attract increasing foreign investment, such as the Investment Compact Act which looks to promote R&D, innovation, and the development of small and medium enterprises through numerous tax benefits.
Despite some uncertainty over the implications of the constitutional referendum, both independent Italian firms, who are frequently favoured in domestic M&A activity, and global firms with offices in the nation stand to benefit from the current upsurge of activity. It is also likely that firms will see a rise in the number of companies seeking counsel both in the lead up to and directly after the referendum.