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Exor’s John Elkann gathers families for Economist bid

John Elkann, the fifth-generation heir to the Agnelli fortune, is reportedly leading a group of families towards a potential buyout of weekly financial publication The Economist and several other titles, according to a company statement.

John Elkann, the fifth-generation heir to the Agnelli fortune, is reportedly leading a group of families towards a potential buyout of weekly financial publication The Economist and several other titles, according to a company statement.

The proposed deal comes one week after UK owner Pearson, another family-controlled conglomerate, sold the Financial Times to the Nikkei Group of Japan, as it looks to focus on its core education business.

Pearson has confirmed it is in talks about the sale of its 50% stake in the Economist Group.

Sources said that the Rothschild, Schroder and Cadbury families are likely to join Elkann in his bid for a greater equity stake in the group, which posted operating profits of £60 million ($93 million) in 2014.

The group of scions, which owns A-class shares, has been voicing their interest in buying out the remaining stake for a number of years. They are allowed to vote for seven of the 13 members of the board, while Pearson, which owns B-class shares, is only allowed to vote for six.

Four trustees must provide consent for certain activities such as the transfer of shares. They must also appoint the editor, who cannot be removed from the role without their permission.

The Economist Group stable includes its namesake weekly, as well as the Economist Intelligence Unit, event company EuroFinance, Capitol Hill periodical Roll Call, and public relations agency TVC.

The Economist, headquartered in London’s Mayfair, currently has a circulation of 5 million, and last year Zanny Minton Beddoes was appointed the first female editor in its 172-year history.

The suggested £500 million price tag gives the company a comparable valuation to the FT Group; however, the existing governance structure would prevent any new investor from gaining a controlling stake.

Exor, the investment arm of the Agnelli family, said: “Were it to proceed, Exor’s increased investment would in any event represent a minority shareholding in The Economist… reflecting Exor’s strong commitment to the editorial independence that lies at the heart of The Economist’s ethos and success."

The Rothschild family currently control about 22% of the Economist Group, while Elkann has a 5% stake, according to the Financial Times.

Media houses Bloomberg, Axel Springer and Reuters were also approached about the deal, according to the Financial Times; however, chose to decline the offer as a result of the company’s complex governance structure.

John Elkann, who is chairman of Fiat Chrysler and heads Exor, has a history of investing in media groups and is a major shareholder in influential Italian newspaper Corriere Della Sera as well as a director at Murdoch’s Newscorp.

The 39-year-old is increasingly focussed on investments in media and financial services, as he looks to move the Agnelli family away from its industrialised past and into the tertiary sector of the economy.

Elkann currently serves on the Economist Group's board.


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