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* Bill was prepared after Vivendi stakebuilding in Mediaset
* Renzi said to sink bill after squabble with industry minister
* Renzi resigned as PM in December, seeking comeback
By Giselda Vagnoni and Giuseppe Fonte
ROME, April 12 (Reuters) - The Italian government has dropped plans to introduce measures to protect local companies from hostile takeovers following feuding in the ruling centre-left coalition, a political source said on Wednesday.
The source said former prime minister Matteo Renzi, who remains highly influential behind the scenes four months after resigning as premier, had pulled the plug on the bill after falling out with Industry Minister Carlo Calenda.
"Renzi himself opposed this. The bill has been buried," said the source, who declined to be named because of the sensitivity of the subject.
Another source close to Renzi confirmed the plan had been shelved, but said it was a collective decision by the government and had nothing to do with the former premier, who is battling to reassert his control over his divided Democratic Party (PD).
"There is no friction in the government. Everyone agreed. You cannot introduce a measure that just favours a few companies," he said, specifically mentioning broadcaster Mediaset, which is controlled by the family of centre-right leader Silvio Berlusconi.
There was no immediate comment from the government, but the measure did not go before the cabinet for approval on Tuesday as many had expected.
In an effort to boost transparency, the bill envisaged forcing investors who had increased their holdings above five percent to state publicly their final objectives.
The initiative followed aggressive stakebuilding by French media group Vivendi, which has sharply increased its holding in Mediaset.
Berlusconi had praised Calenda, who is not a member of the PD, for defending Mediaset and Italian newspapers have speculated that the media-tycoon-turned-politician wants to draw the industry minister into his centre-right camp.
Calenda used to be seen as close to Renzi, but he incurred the centre-left leader's wrath earlier this year by refusing to back his call for early elections.
The industry minister has denied that his bill was aimed at protecting Mediaset, saying it was not retroactive.
Speaking in February, Calenda said he hoped the new rules would be approved by April, explaining that they would be based on those already in place in France and the United States.
There has been a spate of acquisitions of Italian companies across a range of sectors in recent years. The charge has been led by French firms, which have invested some $65 billion in Italy since 2008, according to Thomson Reuters data.
Over the same period, Italian companies have invested a relatively paltry $7.3 billion in France.
Renzi, who was prime minister for two years before losing a referendum on constitutional reform in December, took an open approach to foreign acquisitions.
By contrast, other members of his PD party had complained about the vulnerability of local companies to foreign takeover. (Additional reporting by Crispian Balmer, editing by Louise Heavens)