Fiat Chrysler’s John Elkann approaches crowning achievement with PSA merger

The shareholders of the two companies are expected to approve the merger on Monday, and the closure may occur later this month, according to people familiar with the situation. The new company will be called Stellantis, which incorporates a Latin word that means “illuminate with stars”, and will present Elkann with new challenges, including the management of relations between the main shareholders.

Elkann, who is president of Fiat Chrysler and will assume the same role at Stellantis, has become a skilled negotiator since he reached the top of the family in 2004. Despite his transformation from a recent college graduate who rarely spoke in public to an A Key figure behind the auto industry’s biggest business in decades has not come without hiccups.

Grandson of Gianni Agnelli and the fifth generation of the dynasty who participated in the founding of Fiat in 1899, Elkann negotiated a previously planned merger with Renault SA

. He then hung up after deciding that the French state, a Renault shareholder, was a very difficult partner to control.

Elkann maintained relations with the Peugeot family, a major PSA investor, even as he prepared to merge Fiat Chrysler with Renault, his rival. Elkann personally delivered the news of this merger to Robert Peugeot, who runs his family’s investment firm, according to people familiar with the discussion. That personal touch helped pave the way for Elkann when he got back in touch with Peugeot after the Renault deal collapsed, people said.

Mr. Elkann declined to comment for this article.

While the coronavirus pandemic sank or delayed other previously announced deals, Elkann kept the merger on track. He personally negotiated adjustments that cut the cash dividend to be paid to Fiat Chrysler shareholders, ensuring a similar total payment in the long run, said a person familiar with the negotiations.

Elkann’s emergence as a negotiator occurred in parallel with his growing ability to corner the more than 100 members of his family. Together, they own 53% of Exor, the holding that gives them a 29% stake in Fiat Chrysler and control of Ferrari NV, the Italian football team Juventus, the Economist Group and other assets.

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

Exor’s board includes Mr. Elkann, his sister and only two other members of the family, so he holds periodic meetings with representatives of the nine main branches of the family. Although no decision is made at these meetings, family members say they appreciate the meetings as a way to keep up to date on events beyond what they read in the newspapers.

As president of Stellantis, Elkann will likely have to deal with difficult relations with Italian unions and the government in Rome. Fiat Chrysler has clashed with the two in recent years. While the merger has generally been applauded in Italy, there is anguish among workers who fear for the long-term viability of Fiat Chrysler’s underutilized Italian factories.

Carlos Tavares, PSA’s chief executive who will hold the same position at Stellantis, is expected by company watchers to spend much of his time in Paris, further changing the company’s center of gravity north of the Alps. Fiat Chrysler is registered in the Netherlands, has a tax domicile in the United Kingdom and makes almost all of its profit from business in North America.

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

Tavares will take charge of Stellantis as soon as the deal is closed, but Elkann will be called on to help navigate the disparate interests of the new company’s range of big investors, which will include Exor, the Peugeot family and the French government.

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

Mr. Elkann, who speaks English, Italian, French and Portuguese, has experienced difficult waters in the past, including when he became the leader of the family. The company had lost nearly € 6 billion, equivalent to $ 7.3 billion, and went through four CEOs in the two years before taking over in 2004, and the most likely prospect for the troubled carmaker at the time seemed to be bankrupt. or an acquisition by a group of banks holding billions of euros in debt convertible into Fiat shares.

Mr. Elkann immediately hired Sergio Marchionne as CEO, a change that changed his family’s fortunes. When Marchionne corrected the Fiat quote, Elkann began to learn from the executive, who would become his mentor and close friend.

In the 2 ½ years since Mr. Marchionne’s death, Mr. Elkann has taken on another leadership role. Kind Elkann does not tend to raise his voice in public, denigrate competitors or intimidate journalists – as the swashbuckler Marchionne used to do – but those who know him attribute his stubbornness to looking for a partner to merge with Fiat Chrysler under the influence of the CEO that he hired when he was 28 years old.

Although Elkann has been successful with some of his recent investments, in particular the acquisition of the reinsurer PartnerRe in 2015, most of the increase in Exor’s share price over the past decade can be attributed to Mr. Marchionne’s administrative and financial acumen. The pressure is on Elkann to keep it that way.

Throughout his professional career, he helped his chances by surrounding himself with experienced people. He meets Warren Buffett and attends Berkshire Hathaway regularlyin

annual meeting in Omaha, Nebraska. Elkann bought PartnerRe after consulting Ajit Jain, vice president of insurance operations at Berkshire and a possible successor to Buffett.

The Exor Partner Council, which advises company executives, is chaired by George Osborne, a former UK Treasury chief, and recently added Daniel Ek, founder of Spotify Technology SA, as well as Ruth Porat, chief financial officer of Alphabet Inc, Google’s controller.

When Elkann created a fund within Exor to invest in startups, he asked some of the most famous investors in Silicon Valley for advice. And when he decided to buy majority control of a Chinese fashion company last month, he invested alongside French fashion giant Hermès International SA

.

Write to Eric Sylvers at [email protected]