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Italy’s biggest family business dynasties each handle succession in their own way

by Monica D’Ascenzo

In Italy, 60% of publicly-traded businesses have a family as majority shareholder, according to Consob. That means that succession plans for transferring company ownership is a topic that affects a large part of the Italian Stock Market and its largest groups. Different family dynasties have taken different routes to generational change.

French media group Vivendi’s investment in broadcaster Mediaset has perhaps thrown a spanner in the works for succession at Fininvest, the Berlusconi family's holding company, with a turnover of almost €5 billion and 20,000 employees, which in addition to Mediaset controls publisher Mondadori, the Milan football team and has a 30.124% stake in insurer Mediolanum.

This empire is controlled by 7 holding companies belonging to the Berlusconi family: 4 by founder forme Prime Minister Silvio Berlusconi directly with an approximate 61% share.

The remaining capital is divided equally among his children, with shares of 7.65%. Vivendi's investment in Mediaset has undoubtedly confronted the family with the problem of succession. It must chose between becoming financial investors or remaining as entrepreneurs in the company.

Of Silvio Berlusconi's five children, Marina and Piersilvio would seem to be more inclined to stay within the company, while Barbara, Eleonora and Luigi might take another view.

The Benetton family, on the other hand, has opted for a ‘financial' rather than industrial succession. As early as 2003, they chose to differentiate the role of shareholder from that of management executive, to the point that no member of the Benetton dynasty holds operational roles within the group.

Each of the family's four branches (Gilberto, Luciano, Carlo and Giuliana), each controlling 25% of unlisted holding company Edizione Holding, has someone belonging to the second generation on the board of directors of the companies.

The signal of a break in unity of vision for the future, however, came in late 2016, when Alessandro Benetton stepped down from the board of directors of the eponymous knitwear group. We'll now have to see if this is an isolated episode or the first step towards a rethink in succession plans.

Another Ftse/Mib company engaged in a succession plan is Brembo. LaFourb, which controls 56.5% of the listed company, sees the children of Alberto Bombassei, Luca and Cristina, have bare ownership of 30% of the shares, of which the usufruct goes to the father, plus a further 21% owned by Cristina and 19% by Luca.

In 2015, the latter was awarded the right to express his consent on extraordinary transactions, including sale, and the right to sit on the board of directors of the holding company, provided he holds 45% once his father Alberto is out of the picture. This will allow balanced governance between the siblings.

Other families found a solution to succession by a transfer of ownership of the property to a third party, sometimes reinvesting in the buying group. This happened with the Pesenti family, who sold 45% of Italcementi to German-based Heidelberg in 2016 for €1.7 billion, part of which will be used for the [Pesentis'] purchase of a 5.3% stake in the German group.

A similar solution was found by Pirelli, with the holding company Camfin (controlled by Marco Tronchetti Provera) transferring ownership of 25.97% of Pirelli to a company controlled by ChemChina, subsequently reinvesting in Newco, in 2015. Tronchetti Provera has been guaranteed leadership of the group for five years and the right to appoint his successor.

Family controlled oil refining group Saras, on the other hand, did not go down the same path.

On Jan. 17, news agencies reported the Russian giant, Rosneft, initiated an accelerated placement of its 12% stake of capital in Saras (owned by Moratti family), putting an end to speculations that Saras might definitely turn Russian.

The Luxottica model, which recently said it will merge with a French competitor Essilor, was in some way preempted by Federico Marchetti's choices for his online fashion retailer Yoox, whose merger with Net-a-Porter created an international group that sees Marchetti himself holding a 6% stake yet heading the company, since he can count on an industrial partner like Richemont, holding 25%.

The Agnelli family, which founded and still controls Fiat Chrysler Automobiles, chose a well known solution. They created an international group, 24% of which they still control through family holding company Exor, which in turn is controlled by the Dutch company Giovanni Agnelli BV, grouping founder Giovanni Agnelli's descendants as shareholders according to a long-established shareholding pattern.