By Francesca Landini and Giuseppe Fonte
MILAN (Reuters) - Eni said on Wednesday it had ended its share buyback programme, opening the way for the Treasury to trim its stake in the energy group under a deal that could cut Italy's public debt by around 1.5 billion euros ($1.6 billion).
Debt-laden Italy plans to raise roughly 20 billion euros from asset sales between 2024 and 2026 to keep in check the euro zone's second-largest debt burden in relation to gross domestic product (GDP).
Eni said on Wednesday it had spent nearly 1.4 billion euros on buying its own shares between last September and the beginning of March. In a first tranche of share purchases between May and August the group had spent 825 million euros.
Eni, which hosts an investor day on Thursday, currently owns 5.38% of its overall share capital.
The government owns around 32.4% of Eni, chiefly through the 27.7% it holds indirectly via state lender Cassa Depositi e Prestiti (CDP), while the Treasury has a small, direct stake of 4.7%.
The acquisition and cancellation of shares by Eni is expected to take Italy's total stake above 33%, creating wiggle room for the Treasury to reduce its shareholding without going below 30% of capital, when factoring in CDP's stake.
At current prices, the sale of a potential 3% stake would raise around 1.5 billion euros, helping cut Italy's huge public debt.
Maintaining at least 30% of a listed company gives a shareholder a veto power against a potential takeover attempt.
Eni's board was given the power to cancel shares in one or more steps even before the maximum number of shares authorised has been purchased, the group has said.
The Treasury could potentially act in the short-term, launching a stake sale with an accelerated procedure with the help of investment banks. Two financial sources had told Reuters the Treasury would move only after the group's capital markets day.
Unlike with postal service Poste Italiane, the Treasury does not need to first approve a decree in order to cut its stake in Eni, a government source told Reuters.
Economy Minister Giancarlo Giorgetti raised the prospect of the stake sale in November, when he said that reducing the Treasury's holding in Eni thanks to the company's share buyback scheme was a good idea, confirming a previous Reuters report.
Disposals have taken fresh prominence in Italy as the period of expansionary fiscal policy triggered by the COVID-19 pandemic is set to end next year, when the European Union will adopt stricter budget rules under the reform of its Stability and Growth Pact.
Factoring in proceeds from asset sales, Italy's debt is seen edging down by just 0.6 percentage points between 2023 and 2026, when it is targeted at 139.6% of GDP.
($1 = 0.9143 euros)