Trickle down theory

3 July 2003 By Rob Cox Follow @rob1cox

One theory doing the rounds suggests this is the beginning of a squeezeout of Ifi to gain full control of Exor. The terms of a capital increase at the top of the Fiat chain look designed to give the family greater control.

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Italy's Agnelli family, which controls the nation's biggest industrial group, Fiat, is undertaking two capital increases at public companies under its control to maintain its 30% interest in Fiat.

Fiat is selling E1.8bn as part of a recapitalisation and turnaround plan aimed to bring the maker of Alfa Romeo cars, New Holland tractors and Iveco trucks back into profitability. The Agnelli's stake in Fiat is held by investment company Ifil, which is raising E500m to cover its share of Fiat's rights issue in an underwritten deal.

In turn, Ifi owner of about 63% of Ifil's shares is selling E250m of ordinary and E207m of preference shares, the only kind traded on the market. The new shares are priced at E4.5 each, a deep discount to the E8.5 at which the preference shares traded before the operation was announced. The common shares are solely owned by Giovanni Agnelli & Co., an unlisted vehicle owned by 70 descendants of the man who founded Fiat 104 years ago.

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