By Carolyn Cohn, Pamela Barbaglia and Valentina Za
LONDON (Reuters) -A rebel investor in Generali could mount a legal challenge if his bid to appoint new top executives at Italy’s largest insurer loses by a narrow margin in a shareholder vote this month, a candidate for the chairman’s role said.
In an interview with Reuters, former Goldman Sachs banker Claudio Costamagna said Generali investor Francesco Gaetano Caltagirone could challenge in court a victory by the opposite side at the April 29 AGM called to elect a new Generali board if the margin is less than 6%.
Costamagna – who has been proposed by Caltagirone as the insurer’s new chairman – said the Italian tycoon’s camp was “hopeful” of securing the vote of Italy’s Benetton family which owns around 4% of Generali and is yet to take sides in the feud pitting the construction magnate against Generali’s board and its main investor Mediobanca.
The holding company of the Benetton family was not immediately available for comment.
The tussle for control of the Italian giant – which also ranks as Europe’s third-largest insurer – has called into question the reappointment of CEO Philippe Donnet, who was put forward by Generali’s board as a third mandate.
With a stake of more than 9%, Caltagirone is the second-biggest investor in Generali, behind Mediobanca which owns just under 13%.
To counter Caltagirone’s weight and that of fellow Italian billionaire Leonardo Del Vecchio, who is Generali’s No. 3 investor with a stake of around 8%, Mediobanca has borrowed shares in Generali to give it a 17.2% voting stake at the AGM.
Mediobanca can also count on the vote of Italy’s De Agostini group, which plans to sell its 1.4% stake in Generali only after the AGM and has expressed appreciation for Donnet.
Costamagna said Caltagirone would challenge a victory that reflected merely Mediobanca’s borrowed shares and the De Agostini stake.
“They have about 4.5% borrowed and … the De Agostini stake is already sold … which means the day after the AGM they have 6% less,” Costamagna said.
“If they win by a margin of less than 6%, they’re not going to be legitimate anymore,” he added.
Caltagirone and Generali declined to comment.
The International Securities Lending Association (ISLA) advises against using borrowed shares to vote at shareholder meetings.
A source close to the matter told Reuters that ISLA, which in 2018 said that it “has never condoned the practise of borrowing securities for the sole purpose of voting,” had written to Mediobanca in this respect.
Mediobanca said in an emailed comment that ISLA was reiterating provisions in the UK’s money market code whose rules are not binding.
“The share lending in question is a market transaction aimed at protecting an investment worth nearly 4 billion euros where the interest of Mediobanca coincides with that of other Generali shareholders,” Mediobanca said.
The Milanese merchant bank said it could have achieved the same result by acquiring 3% of the insurer through share purchases, with corresponding hedges, which expire immediately after the AGM – a practice which the bank said had been used by another shareholder without providing the name.
(Reporting by Carolyn Cohn and Pamela Barbaglia in London and Valentina Za in MilanEditing by Stephen Jewkes, Kirsten Donovan and Matthew Lewis)