Italy's government will likely pass legislation aimed at blocking foreign takeovers of domestic companies as soon as Wednesday, a government source told MF-Dow Jones Tuesday.

The legislation will likely take a decree form, meaning it can be implemented quickly, and should be a "decree on Italian-ness," the source said.

Economy Minister Giulio Tremonti discussed such legislation at a cabinet meeting last Friday, in particular reviewing similar French laws. Tremonti later said he was also studying a Canadian law that allows foreign takeovers only if there is a "net benefit" for the Canadian economy.

Such legislation would likely hinder Groupe Lactalis, a French dairy group who earlier Tuesday announced it had increased its stake in Italy's Parmalat SpA (PLT.MI) to 29% ahead of Parmalat's annual shareholder assembly on April 12. Under Italian securities rules, a shareholder must launch a bid to take over a company if its stake is more than 30%.

It could also influence another dispute regarding Edison SpA (EDN.MI), Italy's second-largest power company, which is jointly controlled by Electricite de France (EDF.FR) and Italy's A2A SpA (A2A.MI).

-By Gugliemo Valia of MF-Dow Jones and Christopher Emsden, Dow Jones Newswires; +39-06-6976-6921; chris.emsden@dowjones.com
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