Davide Campari-Milano NV shares fell after Italian prosecutors on Friday ordered the seizure of around €1.3 billion ($1.5 billion) in shares from the holding company that controls the drinks maker.
Shares of Campari fell as much as 6% in early trading in Milan on Monday, the most on an intraday basis since April.
The investigation focuses on Luxembourg-based holding company Lagfin SCA's alleged failure to pay exit tax on about €5.3 billion of capital gains generated when it absorbed an Italian subsidiary that held Campari's controlling stake. Prosecutors say the reorganization effectively shifted the group's management and tax base overseas, triggering the disputed liability.
Lagfin said Friday it always "acted in the most scrupulous respect of any applicable laws and regulations." The tax dispute, which it said started about two years ago, "has never involved Campari Group in any manner whatsoever."
The case adds to Italy's broader effort to tighten enforcement on corporations that restructure and relocate for tax purposes. It also highlights growing European scrutiny of cross-border mergers that move valuable assets abroad while retaining substantial operations in a home country.
"While there is not a direct material impact on Campari's financial statements or on the group operations, the seizure of the shares held by Lagfin could be a headwind for Campari itself due to reputational issues and the potential risk of stock overhang," Banca Akros analyst Paola Saglietti wrote in a note.
Though a fine would not call into question Lagfin's stake in Campari, it would "put pressure" on the holding company's debt, Octo Finances analyst Nicolas Etienne said in a note.
