Gianni Agnelli Dead
Posted 24 January 2003 - 08:58
Gianni Agnelli, the honorary chairman of Fiat and one of Europe's most prominent tycoons, has died.
Mr Agnelli, 81, was arguably the most influential Italian business leader of the 20th century, building Fiat up from a small car maker into a sprawling industrial and financial conglomerate.
Mr Agnelli's death came only hours before he was due to chair a gathering of his family to discuss the future for Fiat.
Hit by slumping demand, the company has plunged into the red, leading to calls for a thorough shake-up.
The Agnelli family, based in the north Italian city of Turin, owns about 30% of Fiat.
Posted 24 January 2003 - 09:17
Posted 24 January 2003 - 09:28
He was a man of true class, and will be sorely missed.
Posted 24 January 2003 - 09:43
Posted 24 January 2003 - 09:53
Posted 24 January 2003 - 11:39
Jan 9th 2003
Fiat, Italy's largest industrial group, was founded by the Agnelli family in Turin in 1899. Originally a car-maker, Fiat diversified into producing other vehicles and engines. In the 1990s the group began investing in non-automotive businesses like Montedison. This strategy made Fiat more diverse, but left it with too much debt.
Fiat's biggest problem is Fiat Auto, its failing car-making business. A deal with General Motors, struck in 2001, has failed to bring the expected benefits. In May 2002 the conglomerate agreed to a radical restructuring of Fiat Auto in return for a $3 billion loan. But the changes led to strikes and protests, lending Fiat's crisis a political dimension. Paolo Cantarella, Fiat group’s chief executive, resigned in June 2002; Gabriele Galateri, his successor, followed suit in December after pressure from Silvio Berlusconi, Italy's prime minister. Roberto Colaninno would like to rescue Fiat, but he faces almost impossible odds. The Agnelli family, which controls Fiat through a system of byzantine complexity, has been steadily shifting its fortune elsewhere.
Fiat’s family report card
Jun 1st 2000 | TURIN
From The Economist print edition
MUST do better: that is the verdict of IFIL, an investment fund that owns 12.5% of Fiat’s shares and is its second-biggest shareholder. If the chiding seems mild, consider that IFIL’s chairman is Umberto Agnelli, younger brother of Gianni and a senior member of the family that founded Fiat in 1899. IFIL, one of two vehicles through which the family controls Fiat, has long been relaxed about the group’s financial performance, admits the younger Mr Agnelli. No longer: Fiat is now expected to do as well as the rest of the portfolio. By implication, more of the family fortune could be directed elsewhere if Fiat fails to shape up.
The main Agnelli family holding in Fiat is in IFI, which has a direct stake of 18.1% in Fiat’s ordinary shares and is also IFIL’s parent, with a 54.2% interest. The family’s cassaforte (strongbox), a partnership called GAeC, owns all of IFI’s voting shares. IFI itself is diversified, owning a stake of 1.2% in Sanpaolo IMI (a bank) and other lesser investments that include ownership of Juventus (a football club). However, IFI’s interest in Fiat represents a whopping 55% of the euro3.6 billion ($3.4 billion) net asset value in its portfolio, and its investment in IFIL is a further 31%.
Clearly, the Agnelli family remains heavily exposed to Fiat’s fortunes. But the family has been spreading its risk, mainly through IFIL. The process has been only gradual. In 1988, the year after it did its first significant deal (an alliance with BSN, a French food group now called Danone), IFIL’s shareholding in Fiat accounted for 53% of the value of its portfolio, then valued at euro775m. Today Fiat represents one-quarter of the portfolio’s net asset value of euro5.2 billion.
Twelve years ago, food was the main diversification away from Fiat. Even after realising substantial gains (euro164m in 1999) by selling most of its food interests, IFIL continues to hold financial investments of 7% in Galbani, an Italian food group, and 4.2% in Danone, through Worms, a French subsidiary. “Our investment in Danone and the investment with them in Galbani give me most satisfaction,” says Mr Agnelli.
During the 1990s, IFIL diversified into banking (it has 3.8% of Sanpaolo IMI), retailing (51.5% of La Rinascente, in an arrangement with France’s Auchan), hotels and tourism (interests include stakes in Club Med and Accor), and substantial industrial investments, through Worms, in paper and sugar. It also moved into and out of cement, where a small investment remains, and telecommunications. IFIL booked a profit of euro169m when it tendered its Telecom Italia shares to Olivetti in last year’s takeover.
Mr Agnelli describes IFIL’s strategy as active portfolio management through seats on the boards of companies in which it has stakes, as well as the contribution of financial and operational resources. The active tag also means that it is willing to dispose of investments that underperform or do not have the potential to add value. As well as the Agnellis, IFIL has other shareholders to keep happy: Morgan Stanley owns 2%, Société Générale 1.5%, Pictet (a Swiss investment bank) 1.7%, a Kuwaiti pension fund 5.6% and Citicorp 0.8%. Getting a better return out of Fiat, a stable investment, asserts Mr Agnelli, would help. He hopes that Fiat’s venture with GM will bring good results, partly because this will allow the automotive group to diversify further. A clear message to Paolo Fresco, Fiat’s chairman.
The boss as Superman
Jan 9th 2003
From The Economist print edition
Is it a bird? Is it a plane? No, it's Roberto Colaninno, trying to save Fiat
IT IS a gripping scene. A big company is in trouble, its owners and creditors squabbling as it rushes headlong towards a nasty end: at best being broken up with the good bits falling into foreign hands, at worst bankruptcy. Then—presto!—out of the blue flies in a saviour, an experienced boss armed with cash and a plan to take charge and put things right. Who could resist our business Superman? But does he really exist?
It seems he does, and is living in Italy, having replaced his Clark Kent alias with that of Roberto Colaninno. He ran Olivetti and then Telecom Italia, from which he was cruelly ousted when Pirelli took control in 2001. Having watched the collapse of the Fiat industrial empire with growing dismay, he has now sprung into action. He says it is vital for Italy, and especially the Turin region, to retain a car industry. Many thousands of jobs are at stake. Fearlessly, Mr Colaninno has now donned his red underpants, laid his reputation on the line and offered to run Fiat.
He is now finalising a rescue plan that will probably be presented to Fiat's board in the next couple of weeks. If he wins their support, all—all?—he has to do is persuade the banks and the Agnelli family, which together control Fiat, to stand aside and let him work his magic. According to this script, Fiat can be saved not just as an Italian concern, but also as a force in the global car market, in which it is now failing. Fiat's shares rose by one-fifth on news of Mr Colaninno's possible coming.
It sounds good. Too good, perhaps. Mr Colaninno is no slouch, but at every turn he faces almost impossible odds. There are plenty of examples, especially in America, of people who think they can turn around a company getting the chance to do so by buying it. But it is rare for an outsider to win that opportunity merely by proposing himself to those who now control the firm, offering only the purchase of a minority stake plus, of course, the brilliance of his ideas and management skills.
In the case of Fiat, Mr Colaninno needs to win the support of multiple constituencies, including the government. Last summer, when he first began privately to express interest in Fiat, he was quickly blocked by Silvio Berlusconi, Italy's prime minister as well as one of its most powerful businessmen. Mr Berlusconi changed his mind only recently, when it became clear that his own efforts to find a solution were failing. Now he hopes to ride on Mr Colaninno's coat-tails and take credit if things go right.
Three huge obstacles remain: the banks, the Agnellis and the business itself. Four big Italian banks ultimately control Fiat's fate. If Fiat meets debt-reduction targets and stems the outflow of cash from its car business, the banks will continue to support it, including with new loans in 2005. If Fiat slips, it will in effect be bust. Its debt was recently downgraded to junk status by Moody's, a rating agency, which gave warning of worse to come.
The banks met on January 8th to hear a progress report and to consider a new plan to split Fiat Auto from the rest of Fiat, thereby limiting the negative impact of cars on the group as a whole. This would need—and probably fail to win—the support of General Motors (GM), which owns 20% of Fiat Auto and may, under a put-option deal, have to buy the rest of it as soon as next year. GM is now working with Fiat to improve a rescue plan for Fiat Auto agreed last autumn. It wants to renegotiate the option—or, better still, to scrap it.
The bankers are in two minds, not least because this new plan may not be all that different from what Mr Colaninno is proposing. And although they still have good reason not to trust the Agnellis, they also have good reason to be cautious about Mr Colaninno. Some have worked with him before and respect his abilities. Others are openly sceptical.
Truth, justice and the Italian way of life
The Agnellis, too, seem divided—with the protracted illness of the clan chief, Gianni, not helping. Late last year the family, which uses its 34% stake to control Fiat, broadly rallied around Umberto Agnelli's efforts to save the group. Umberto backed an attempted coup to install new managers friendly with Mediobanca, a Milanese investment bank. But other banks saw this as a direct attack and rallied in turn around Paolo Fresco, Fiat's chairman. A new chief executive was imposed beneath him, but Mr Fresco narrowly survived—though he is still due to retire in July. He has since been receptive to Mr Colaninno and has given him the go-ahead to talk to Fiat's board.
The failed coup discredited Umberto within the family. Susanna Agnelli, his sister, has become an influential voice favourable to Mr Colaninno. But the split means that Mr Colaninno has an even harder job to persuade the family to back his plan. He does not yet know if the family would be prepared to cede control in return for his investment—of maybe euro2 billion ($2.1 billion)—and managerial efforts to save the group. Nor does he know if the Agnellis are privately attempting to undermine his efforts to win the banks' support.
What if Mr Colaninno somehow persuades both the banks and the Agnellis to give him a chance? His final obstacle may be the biggest of all. Poor management has seen Fiat's car business decline to the verge of collapse. Its product range is weak, its market share is evaporating and it is haemorrhaging cash.
What could Mr Colaninno do that nobody else can? He claims that his long experience in the components sector gives him a special insight into how to fix the car business. He would hire better managers and address weaknesses in design. He has not said so, but he might be far tougher than existing management about shutting inefficient car factories, especially if he can convince politicians—above all, Mr Berlusconi—that the alternative will be more dramatic job losses due to the bankruptcy of the entire group. Even so, the enterprise is hugely risky. A task fit for Superman? Or merely an impossible one?
Posted 24 January 2003 - 15:20
Posted 24 January 2003 - 15:59
You might confuse him with his grandfather, Giovanni Agnelli, who raced at the turn of the century!?
Originally posted by Yves
If I remember well, the avocatto was also a race driver in his first years. Could some one confirm ? Didn't he race at a few occasions Fiat cars, of course ?
Posted 24 January 2003 - 16:42
death on MSN website...
That tells me a lot about the state of America these days...if you ain't in
Hollywood, if you ain't singin' or dancin'...we don't care...
He was a very, very important world figure who had a major influence on this entire century. Besides, the man invited color. In my opinion he was
extremely dynamic. When I think Italian, his is the first image that comes
to my mind.
Posted 24 January 2003 - 17:44
In Los Angeles it's not only singing and dancing. Sports matter too. Shaq's injured big toe was front page news! Arghhhhhhh!!!
Also: It's my understanding that the portion of GM stock that Fiat Auto exchanged for their stock is was purchased by a bank. At the time Fiat traded it's stock for GMs, it was worth double waht Fiat Auto got for it from the bank...another billion dollar loss....