Milan, Feb. 26: Fiat’s chairman, Paolo Fresco, said Tuesday that he would step down on Friday, several months earlier than planned, to make way for Umberto Agnelli to take over.
Agnelli, 68, runs two family investment companies through which Fiat, Italy’s largest manufacturer, is controlled. He is the brother of Giovanni Agnelli, the family patriarch who died last month. While Umberto is viewed as less committed than his brother was to holding on to Fiat’s money-losing car unit, he inherits a dedication to the company's core business. The two brothers are grandsons of Giovanni Agnelli, who founded Fiat in 1899.
In a statement, Fresco said: “My desire to guarantee a smooth changeover led to my decision to move up the date of my resignation. I’m sure that my decision will send a strong message both outside and inside the company.”
Umberto Agnelli touched off a rally in the company’s shares last year when he said the family might be willing to part with Fiat Auto. Under Agnelli, the family’s investment companies have been diversifying over the last decade and now have interests in insurance, tourism, telecommunications and energy.
Umberto Agnelli was passed over for the top job at Fiat several times by his brother, who was chairman from 1966 until 1996. Umberto Agnelli was thought to have missed his last chance at the top spot in 1996 when his brother looked for a successor outside of the family after reaching the company’s required retirement age.
Agnelli may have little room to manoeuvre as he takes control of Fiat, because the company's largest creditor banks are pressing for asset sales to ensure that their loans are repaid. Fiat has confirmed that it is looking to sell its insurance and aerospace-components businesses. Analysts expect those two units will raise at least 3 billion euros.
The resignation of Fresco comes as the board meets Friday to discuss new financing for the car unit.
Fresco, known as the ‘Americano’ because he worked at GE for more than 30 years, devised a share swap with General Motors that gave GM a 20 percent stake in Fiat's car unit.
Fresco was in the United States over weekend to meet with GM executives to discuss a ``put'' option that gives Fiat the right to force GM to buy the 80 percent it does not own beginning next year. One possibility discussed was for GM to invest more money in Fiat Auto in return for the cancellation of the put option.
Fiat shares have fallen more than 65 percent since Fresco took over in 1998. The stock fell to an 18-year low last week before rebounding. In Italy, shares of Fiat rose 0.4 percent Tuesday, to 7.19 euros.
The car unit, which is expected to announce on Friday that it lost about 1.3 billion euros last year, has failed to turn a profit since Fresco took over as foreign rivals stole market share.