Atlantia’s exit highlights Milan’s battle to keep the heavyweights on the market

  • Atlanta will be delisted following the acquisition
  • Many Italian companies avoid the stock market
  • Authorities seeking to strengthen the reputation of Borsa Italiana

MILAN, Nov 25 (Reuters) – The acquisition of Atlantia (ATL.MI) will cut another 19 billion euros ($19.5 billion) from the value of the Milan Stock Exchange and bring the number of companies exiting the stock exchange to 12 this year, fueling fears about its whereabouts.

Lawmakers and regulators want to reverse the trend and strengthen the 200-year-old Borsa Italiana’s role at the center of Italian business.

Barbara Lunghi, head of stock listings in Italy at market owner Euronext, says the control of being a listed company and having outside investors drives firms to innovate and develop.

“It gives companies that extra edge that helps drive growth,” Lunghi said.

But the problem runs deep, with many Italian family-owned companies unwilling to relinquish control by listing their businesses unless they need cash for mergers and acquisitions or other expansion strategies.

The Consob Market Observatory this year approved measures aimed at simplifying the procedures for the approval of listing prospectuses, including the possibility of presenting them in English.

Still aiming to accelerate change, Italy this year began exploring how to revise its listing, voting and other rules to address issues holding back the country’s capital markets, though this process has been frozen. by a change of government following the victory of a right-wing coalition in late September elections.

MILAN EXODUS

So far this year 11 companies have abandoned Euronext Milano, including Agnelli family holding company Exor (EXOR.AS), which moved to the Amsterdam Stock Exchange in line with its registered office.

Road and airport operator Atlantia is leaving after a buyout by the Benetton family and Blackstone passed the 90% support threshold on Thursday.

Travel caterer Autogrill (AGL.MI) is expected to be delisted after a merger with Swiss-based Dufry, and the fate of shoemaker Tod’s (TOD.MI) remains uncertain after a failed takeover bid by its principal shareholder.

CNH Industrial (CNHI.MI), whose shares are listed in both Milan and New York, is also considering ending the dual listing and targeting the NYSE.

Taking listed companies private is a broader trend shared by many European stock exchanges, as low prices and the availability of cheap money made it cost-effective.

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FEW NEW ARRIVALS

On the plus side, four companies have joined Euronext Milano’s core market this year, including truck maker Iveco (IVG.MI), the result of a spin-off. Two other companies have moved on from the smaller Euronext Growth Milan.

The situation is healthier for Euronext Growth Milano itself, a market dedicated to small and medium-sized enterprises with minimum access requirements. In 2022 it counted 18 new listings, but the overall market cap is very low.

The death of Italian IPOs is a perennial problem.

Over the past 20 years, the major market has lost 268 listed companies and gained just 185, according to research by Intermonte published in March. By contrast, the less regulated SME market attracted 263 listed companies and saw 68 delistings.

CULTURAL ISSUE

The fact that listed companies are relatively few has its roots in the history of the country, said Andrea Beltratti, professor of political economy at Bocconi University in Milan.

Beltratti said Italy lacks a long tradition of equity finance and its economy has been relatively weak over the past 20 years.

The strong presence of banks and other financial intermediaries in Italy has replaced the role of the markets, so companies have often preferred to ask them for financing.

“The advantages of being listed are the ease of raising capital and the reputation (position), but there are also costs, related to regulation, the need for transparency and multiple interactions with investors,” Beltratti said.

“I don’t think these are issues that can be resolved in months or even years because it’s a cultural issue,” added Beltratti. ($1 = 0.9755 euros)

Reporting by Elisa Anzolin; Graphics by Danilo Masoni; Editing by Keith Weir and David Holmes

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