LSE faces none of Italy's protectionist outcry

MILAN (Reuters) - Compared with the problems faced by other foreigners trying to buy Italian companies, the London Stock Exchange (LSE.L) (LSE) has so far had an easy ride.

Rather than provoking a protectionist outcry like the bid made by Spain's Abertis (ABE.MC) for Atlantia (ATL.MI) last year, its deal to buy smaller peer Borsa Italiana has received a warm welcome from the government.

The LSE said on Saturday it had signed a deal to acquire the Milan bourse for 1.6 billion euros ($2.15 billion), the latest in a series of moves to consolidate the world's exchanges.

When news of the deal first broke last week, Economy Minister Tommaso Padoa-Schioppa said it was "very positive" and an important step in strengthening Italian financial institutions on the international scene.

Industry Minister Pierluigi Bersani also favored the deal, while a central bank official expressed "appreciation" for it.

Such was not the case for Abertis and other foreign companies when they tried buying companies in sectors considered strategic by Rome, such as highways and telecommunications.

Economist Tito Boeri said the government welcomed the LSE deal because Borsa Italiana had nowhere else to grow but outside Italy. "There was no other alternative," he said.

NO FEAR OF JOB LOSSES

Given the relatively small number of employees at Borsa Italiana -- about 500 -- the deal was not likely to excite the country's unions, whose influence is felt in Prime Minister Romano Prodi's centre-left government.

"There's no real fear of job losses," said Bank of America economist Gilles Moec.

The stock exchange was also a less tangible asset compared with roads, phones, or electricity. Politicians consider those sectors strategic because they are part of a country's infrastructure, Moec said.

"There has always been a fear on continental Europe of foreigners getting overwhelming control of utilities that could lead to substandard quality or a loss of industry," he said.

Given their significant stakes in Borsa Italiana, the deal also gives Italian banks the opportunity to become shareholders in one of the world's largest stock markets.

Borsa Italiana's biggest shareholders include UniCredit (CRDI.MI) with a 19.9 percent stake, Intesa Sanpaolo (ISP.MI) with 18.7 percent and Monte dei Paschi di Siena (BMPS.MI) with 10.4 percent.

In the case of Abertis, the toll-road operator gave up last year trying to acquire Atlantia, then called Autostrade. It blamed obstacles put up by the government, including plans to introduce a new law on highway concessions.

U.S. phone company AT&T (T.N) abandoned a joint bid for a controlling stake in Telecom Italia (TLIT.MI) because there was too much political turmoil and uncertainty.

Without its U.S. partner, Mexico's America Movil (AMXL.MX) saw itself closed out of a deal when Rome put its weight behind a bid by Spanish rival Telefonica (TEF.MC) and a group of Italian banks.

Although Telefonica got a piece of Telecom Italia, it had to leave control in the hands of the banks.