Exor, the multi billion dollar investment vehicle for the Agnelli family, has become the largest shareholder in The Economist Group after British owner Pearson sold its 50% stake to a group of families for £469 million ($731 million).
Under the terms of the deal, Exor Spa, headed by fifth-gen John Elkann, will pay £287 million to increase its stake to 43.4% from 4.7% and the Economist Group will buy back the remainder of Pearson’s stake for £182 million.
The Cadbury, Layton, Rothschild and Schroder families are existing shareholders in The Economist Group, which posted operating profits of £60 million last year, despite a third successive year of falling revenues due to falling print advertising.
The deal comes two weeks after Pearson, itself a family-controlled conglomerate, sold the Financial Times to the Nikkei Group of Japan, as it looks to focus on its core education business.
Elkann, 39, commented on the deal: "By increasing our investment in The Economist we are delighted to affirm our role as one of the group's long-term supportive shareholders, along with the Cadbury, Layton, Rothschild and Schroder families.
“We have always admired the editorial integrity and thoroughly global outlook that are the hallmarks of The Economist's success and we fully subscribe to its historic mission to 'take part in a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress’.
Exor added that the governance rules at The Economist would be amended to limit the voting powers of any single shareholder to 20% and to ensure that no one individual or company can own more than 50% of the group’s shares.
Four trustees must provide consent for the deal, which Exor said is likely be concluded by the end of the year.
The Economist Group chairman Rupert Pennant-Rea said the publication had "been blessed over many years to have had in the Financial Times and subsequently Pearson, a shareholder that understood and supported the ethos of the group".
Elkann, the grandson of Italian industrialist Gianni Agnelli, has a history of investing in media groups, and has been increasingly looking to diversify his portfolio in order to escape the capital intensive automotive business.
“We are convinced of the huge potential that still lies ahead and particularly in The Economist’s ability to seize the many development opportunities linked to the digitisation of the media industry,” Elkann said in the statement.
The Economist, headquartered in London’s Mayfair, currently has a circulation of 5 million.