John Elkann, Fiat Chrysler, wins crown achievement with PSA merger

Shareholders of both companies will approve the merger on Monday, and according to the people familiar with the situation, the closure can only take place later this month. The new company will be called Stellantis, which contains a Latin word meaning “to shine with stars”, and will mr. Elkann presents new challenges, including managing relationships between major shareholders.

Mr. Elkann, who is the chairman of Fiat Chrysler and will take up the same position at Stellantis, has become a training company since rising to the top of the family in 2004. a key figure behind the biggest car industry in decades is not without hiccups.

The grandson of Gianni Agnelli and the fifth generation of the dynasty that founded Fiat in 1899, Mr. Elkann negotiates a previously planned merger with Renault SA

. He then pulled the plug after deciding the French state, a Renault shareholder, was too clumsy a partner.

Mr. Elkann maintained relations with the Peugeot family, a major PSA investor, even though he was willing to merge Fiat Chrysler with Renault, their rival. Mr. Elkann personally brought the news of the merger to Robert Peugeot, who heads his family’s investment business, according to people familiar with their discussion. The personal touch helped pave the way for Mr. Elkann to facilitate when he again with mr. Peugeot comes into contact after the Renault deal fell apart, people said.

Mr. Elkann declined to comment on this article.

While the coronavirus pandemic has scrapped or delayed other previously announced transactions, Mr. Elkann kept the merger on track. He personally negotiated adjustments that would reduce the cash dividend to be paid to Fiat Chrysler shareholders, while guaranteeing a similar total payout in the longer term, someone familiar with the negotiations said.

The rise of mr. Elkann as a trader ran in parallel with his increasing ability to correct more than 100 members of his extended family. Together they own 53% of Exor, the holding company that gives them a 29% stake in Fiat Chrysler and a controlling interest in Ferrari NV, the Italian football team Juventus, the Economist Group and other assets.

Exor’s rich dividend payments and an average annual profit of 25% in the company’s share price over the past decade have Elkann helped win the support of his family. He also built togetherness among his cousins ​​through family rituals, including an annual football game and dinner, according to several Agnelli family members.

In the board of directors of Exor, Mr. Elkann, his sister and only two other family members, and therefore he holds regular meetings attended by representatives of the family’s nine main branches. Although no decisions are made at the meetings, family members say they appreciate the gathering as a way to keep abreast of developments that go beyond what they read in the newspapers.

As chairman of Stellantis, Mr. Elkann probably has to navigate rocky relations with Italian unions and the government in Rome. Fiat Chrysler has hit with both heads over the past few years. Although the merger in Italy is generally applauded, there is anxiety among workers who fear for the long-term viability of the Italian factories that Fiat Chrysler has underutilized.

Carlos Tavares, CEO of PSA, who will hold the same title in Stellantis, is expected by company observers to spend much of his time in Paris, which will shift the focus of the company north of the Alps further. Fiat Chrysler is registered in the Netherlands, has its tax office in the United Kingdom and makes almost all of its profits from the North American company.

Mr Elkann defied some forecasters who said he would eventually sell all or part of Exor in Fiat Chrysler to invest in faster-growing businesses.

Mr. Tavares will take the helm of Stellantis as soon as the deal is signed, but Mr. Elkann will appeal to help navigate the diverse interests of the new company’s major corporations, including Exor, the Peugeot family and the French government.

“Elkann will have to switch from trader to the role of mediator,” said Giovanni Favero, a professor in the management department at Ca ‘Foscari University in Venice. “The American, Italian and French interests will try to pull the company in different directions.”

Mr. Elkann, who speaks English, Italian, French and Portuguese, has driven through difficult waters in the past, even when he became leader of the family. The company lost almost € 6 billion, equivalent to $ 7.3 billion, and went through four CEOs in the two years before it took over in 2004, and the likely prospect for the troubled carmaker at the time was bankruptcy or ‘ a takeover. by a group of banks that have converted billions of euros in debt into Fiat shares.

Mr Elkann immediately appointed Sergio Marchionne as CEO, a move that changed his family’s fate. When Mr. Marchionne corrects the listing of Fiat, Mr. Elkann begins to learn from the executive, who would become his mentor and good friend.

In the 2½ years since the death of mr. Marchionne, the mr. Elkann took on a more leadership role. The gentle mr. Elkann does not tend to raise his voice in public, belittle competitors or tentative journalists – as the cocky Mr Marchionne tended – but those who know him attribute his stubbornness to looking for a partner to work with Fiat to merge. Chrysler under the influence of the CEO he appointed when he was 28.

Although Mr. Elkann has been successful with some of its recent investments, most notably the takeover of reinsurer PartnerRe in 2015, the biggest increase in Exor’s share price over the past decade can be traced to the managerial and financial insights of Mr. Marchionne. The pressure is on mr. Elkann to continue it.

During his professional career, he helped his chances by surrounding himself with experienced people. He knows Warren Buffett and regularly attends Berkshire Hathawaysay

annual meeting in Omaha, Neb. Mr. Elkann bought PartnerRe after consulting with Ajit Jain, Berkshire’s vice chairman of insurance operations and a possible successor to Mr. Buffett.

The chairman of Exor’s Partners, which advises board members of the company, is chaired by George Osborne, a former British treasurer, and recently appointed Daniel I, founder of Spotify Technology SA, as well as Ruth Porat, chief financial officer of Google parent Alphabet Inc., added. .

When Mr. Elkann set up a fund in Exor to invest in startups, he drew on some of Silicon Valley’s best-known investors for advice. And when he decided last month to buy majority control of a Chinese fashion industry, he invested with French fashion giant Hermès International. SA

.

Write to Eric Sylvers by [email protected]