Viva l'ipocrisia

16 March 2006 By Hugo Dixon

They don t like the French state for helping engineer a merger between Suez and Gaz de France. But Italy s Enel is statecontrolled too and defended by a whole pharmacy of poison pills.

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An Italian law, passed in December, allows companies in which the state owns a significant stake – such as Enel and Eni to write poison pills into their statutes.

The poison pill would, among other things, allow the company to issue shares to a segment of its shareholder base at nominal value. Enel's nominal share price is E1, compared to a stock price of E7.

The pill would also allow this subgroup of shareholders to stop the company should it try to remove the current restriction on anyone other than the state voting more than 3% of Enel's stock. Currently, this cap falls away for anyone who makes a genuine takeover bid. But if the statute was changed to this effect, the limit would hold even if there was a public offer.

While this law has been passed in Italy, companies will only change their statutes after the EU has approved it. Changing the statute requires a 2/3 majority.

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