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Umberto Agnelli's death leaves Fiat in a financial fix

NY TIMES NEWS SERVICE, NAPLES, ITALY
Sunday, May 30, 2004, Page 12

A man reads a newspaper in front of the Fiat factory in Turin on Friday, after Italian auto giant chairman Umberto Agnelli died overnight at the age of 69. Agnelli's brother Giovanni ``Gianni'' Agnelli, 13 years his senior, was long the public face of Fiat, presiding for decades over the company and celebrated as one of Italy's most powerful industrial magnates. PHOTO: AFP

Umberto Agnelli, who stepped into the limelight at Fiat, the Italian auto empire, after a lifetime in the shadow of relatives renowned for their flamboyance, died late on Thursday in the family's villa, La Mandria, outside Turin. He was 69.

The cause was lymphoma, a cancer of the lymph nodes, a Fiat spokesman, Richard Gadeselli, said on Friday. Agnelli's illness was disclosed less than a month ago.

The death of Agnelli in many ways severed the last connection to a time that a generation of Italians remember as a sort of glory days when business boomed, tiny Fiat 500 cars crammed nearly every Italian street and the sprawling Agnelli clan dominated the public's imagination with a jet-set style that has often been compared to the Kennedys.

That style was personified by Agnelli's older brother, Giovanni, called Gianni, who died 16 months ago, also of cancer, and overshadowed his less flashy younger brother for decades.

While Umberto Agnelli's death closes the chapter on a generation of Agnelli lore, it also leaves a blurry future for Fiat, a company that is increasingly saddled with financial troubles and faces the threat of foreclosure on its more than US$3 billion in loans. Its workers are protesting and striking against the threat of more job cuts.

Nevertheless, the country mourned the death of Agnelli on Friday.

As news of Agnelli's death spread Friday morning, Italians shook their heads on the streets and in coffee shops and expressed words of condolence. Prime Minister Silvio Berlusconi, in Rome, echoed those sentiments, saying he was "deeply saddened for the loss of a dear friend."

Umberto Agnelli was born on Nov. 1, 1934, in Lausanne, Switzerland, the son of Edoardo Agnelli and Princess Virginia Bourbon del Monte di San Faustino.

He was the grandson of Giovanni Agnelli, who founded the company as Fabbrica Italiana Automobili Torino in 1899.

At the height of its powers and, to a lesser measure today, the Agnellis wielded influence in politics, counting senators and government ministers among their ranks. They also continue to publish one of the country's leading newspapers, La Stampa, and field winning soccer and auto racing teams.

Agnelli's life intersected with Italian passions, from politics to soccer to fast cars.

He served as a senator of the Italian Republic, from 1976 to 1979, and was the honorary chairman of the Juventus soccer team, which is the most successful squad in Italian history. He was the past president of the Italian Football Association.

Agnelli is survived by his wife, Allegra; a son, Andrea; and a daughter, Anna.

It was only after Agnelli graduated from the University of Turin with a law degree that he joined the family's automotive enterprise. He was named president of the company's operations in France in 1965 and doubled its sales there in five years.

But the top job at Fiat was more elusive.

Agnelli was passed over for it several times by his brother, whose chairmanship spanned decades. Agnelli spent most of his years in less prominent jobs working for Agnelli family holding companies, which own 30 percent of Fiat. Under his watch, the family diversified into new businesses. In addition to the carmaking unit, Fiat now owns auto component companies as well as CNH Global, a farm and construction machinery operation; Iveco, a truck business; and Ferrari, the luxury carmaker.

Agnelli had only played a peripheral role at Fiat until being named chairman in February 2003, a month after the death of his older brother, who turned Fiat into a worldwide conglomerate and helped industrialize postwar Italy

Agnelli touched off a rally in Fiat's shares in 2002 when he suggested the company should sell its carmaking unit and invest in the conglomerate's other businesses. But Fiat instead kept the car unit, which accounts for 42 percent of the group's sales, and opted to sell more than US$7 billion in other assets.

Today, Fiat is still facing its worst financial crisis. It lost more than US$2 billion last year and about US$4 billion in 2002. Many of Italy's biggest banks pooled together to lend Fiat billions of dollars in 2002, and that loan could be converted into shares if certain goals are not met. That would dilute the Agnellis' controlling stake.

It is unclear who will lead the Fiat empire.

Agnelli's widely rumored successor, his grandnephew, John Elkann, 28, has been considered too young and inexperienced to take control. It was unclear Friday whether he would assume the role.

"The chairmanship is likely to stay in the family, but it doesn't seem possible that they could appoint Elkann because he is still far too young to take the position," said Nicolo Pini, a fund manager with Ifigest in Florence.

Even on the streets of Naples on Friday, hundreds of miles from the Agnellis' ancestral home and Fiat headquarters in Turin, Agnelli's death was on people's minds.

"It's half a century of history that's finished now," said Antonio Paone, 53, after he parked his red Fiat 500 onto the curb of a congested street.
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