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Agnellis keep hold on Fiat
Reuters / September 16, 2005
MILAN (Reuters) -- The Agnelli family's glory days of ruling over Italian industry and the post-war dolce vita seemed to be a thing of the past when its Fiat empire tumbled into loss and its leading patriarchs died.
But the family silenced its critics this week with a 535 million euro ($654 million) deal to stop its holding company Ifil falling below a long-standing 30 percent threshold when banks convert a loan into Fiat shares next week.
"This deal shows that family capitalism, which is so important in Italy, can fully live up to its responsibility and put forward resources to help our companies grow," Fiat Chairman Luca di Montezemolo said on Friday.
Despite keeping control of Fiat, Ifil changed its language, calling the new shareholding "a strictly business relationship" and suggesting the 106-year-old company was not a sacred cow.
"Only a year ago, we would not have invested money in Fiat," said Ifil Chairman Gianluigi Gabetti.
"We believe we shouldn't be required to remain in the past with a moral obligation to past history. But a future history is being built by new management. The leaders have conquered our trust and they deserve our money," he added.
He also voiced concern that if Ifil did not take advantage of Fiat's current turnaround, a predator might have swooped.
DIVISIONS WITHIN
Recent comments suggested there were deep divisions between the dozens of Agnelli cousins over how to protect its relationship with Fiat. Few Agnellis have anything to do with its day-to-day running and they hold ever more fragmented stakes in the family holding company.
Andrea Agnelli, who sits on Fiat's board and manages 10 percent of the family cash tin at the top of its chain of command, said the family should "not reconquer a lost fortress" or stand by Fiat as "a romantic ideal".
"What does family leadership really mean? It usually tends to wane or it risks becoming an obstacle for a big company," the great-grandson of Fiat's founder told Il Foglio newspaper.
His cousin John Elkann, on the other hand, was said to have insisted Ifil avoid being diluted. The 29-year-old often says the family has a duty to Fiat, as shown by his taking on the vice-chairmanship "because that's what came my way".
"Right now Fiat needs continuity so the Agnellis' move is positive but let's not forget that it was also the family who almost ruined the company by standing against management," said a Milan-based analyst, who declined to be named.
Managers wanted to sell Fiat Auto in 2000, leaving the group to focus on modern businesses like energy. But Gianni Agnelli, long the Fiat patriarch, did not want to sell Italy's industrial flagship and instead agreed a delayed sale that hung over Fiat until earlier this year.
The family's unwillingness to put forward too much money during the recent crisis also meant Fiat had little cash to play with for a restructuring and had to sell profitable assets.
Since Chief Executive Sergio Marchionne swept through the management ranks and modernized the company, it has begun to pull back towards profit although all eyes are still on whether it can fully resurrect its car business.
Gabetti, who has acted as mentor for many of the younger Agnelli heirs since Gianni and Umberto Agnelli died in 2003 and 2004, said he was confident Marchionne's team would write a new page in the history.
But he ended an analysts' conference call: "Thank you and good luck. To all of us."
Reuters / September 16, 2005
MILAN (Reuters) -- The Agnelli family's glory days of ruling over Italian industry and the post-war dolce vita seemed to be a thing of the past when its Fiat empire tumbled into loss and its leading patriarchs died.
But the family silenced its critics this week with a 535 million euro ($654 million) deal to stop its holding company Ifil falling below a long-standing 30 percent threshold when banks convert a loan into Fiat shares next week.
"This deal shows that family capitalism, which is so important in Italy, can fully live up to its responsibility and put forward resources to help our companies grow," Fiat Chairman Luca di Montezemolo said on Friday.
Despite keeping control of Fiat, Ifil changed its language, calling the new shareholding "a strictly business relationship" and suggesting the 106-year-old company was not a sacred cow.
"Only a year ago, we would not have invested money in Fiat," said Ifil Chairman Gianluigi Gabetti.
"We believe we shouldn't be required to remain in the past with a moral obligation to past history. But a future history is being built by new management. The leaders have conquered our trust and they deserve our money," he added.
He also voiced concern that if Ifil did not take advantage of Fiat's current turnaround, a predator might have swooped.
DIVISIONS WITHIN
Recent comments suggested there were deep divisions between the dozens of Agnelli cousins over how to protect its relationship with Fiat. Few Agnellis have anything to do with its day-to-day running and they hold ever more fragmented stakes in the family holding company.
Andrea Agnelli, who sits on Fiat's board and manages 10 percent of the family cash tin at the top of its chain of command, said the family should "not reconquer a lost fortress" or stand by Fiat as "a romantic ideal".
"What does family leadership really mean? It usually tends to wane or it risks becoming an obstacle for a big company," the great-grandson of Fiat's founder told Il Foglio newspaper.
His cousin John Elkann, on the other hand, was said to have insisted Ifil avoid being diluted. The 29-year-old often says the family has a duty to Fiat, as shown by his taking on the vice-chairmanship "because that's what came my way".
"Right now Fiat needs continuity so the Agnellis' move is positive but let's not forget that it was also the family who almost ruined the company by standing against management," said a Milan-based analyst, who declined to be named.
Managers wanted to sell Fiat Auto in 2000, leaving the group to focus on modern businesses like energy. But Gianni Agnelli, long the Fiat patriarch, did not want to sell Italy's industrial flagship and instead agreed a delayed sale that hung over Fiat until earlier this year.
The family's unwillingness to put forward too much money during the recent crisis also meant Fiat had little cash to play with for a restructuring and had to sell profitable assets.
Since Chief Executive Sergio Marchionne swept through the management ranks and modernized the company, it has begun to pull back towards profit although all eyes are still on whether it can fully resurrect its car business.
Gabetti, who has acted as mentor for many of the younger Agnelli heirs since Gianni and Umberto Agnelli died in 2003 and 2004, said he was confident Marchionne's team would write a new page in the history.
But he ended an analysts' conference call: "Thank you and good luck. To all of us."