Montedison-Gemina merger collapses
Wednesday 25 October 1995
Italy's most ambitious merger plan in years, the creation of a giant industrial conglomerate through the fusion of the loss-making Montedison- Ferruzzi group with the holding company, Gemina, has collapsed following the launch of a judicial investigation into Gemina's accounting practices.
In a severe blow to the prestige of Italian business leaders involved in the deal, including Gianni Agnelli, chairman of Fiat, Gemina announced late on Monday night that it was postponing the merger indefinitely because market conditions were not right.
At the same time, Montedison's financial arm, Ferfin, announced it was seeking more than L1,000bn (pounds 351.4m) in new capital - a signal that it was already looking for other solutions to its debt problems.
The decision to create Italy's second-largest industrial conglomerate, producing everything from chemicals to encyclopedias, caused a sensation when it was announced in September because it had been negotiated in secret and concentrated considerable power in the hands of a few players - among them Mr Agnelli and Enrico Cuccia, the 87-year-old honorary chairman of Mediobanca, the merchant bank.
The deal was never popular with smaller shareholders, who considered they had been used as pawns in a high-level power game, and raised eyebrows among international investors who questioned the wisdom of creating a loss-making behemoth when large conglomerates are going out of fashion.
The severest blow came two weeks ago, when Milan magistrates announced they were placing 10 senior Gemina executives under investigation for irregularities, including an L800bn hole in the accounting figures for the past 18 months. The investigation is continuing.
Gemina's share price, which had stood at L908 at the time of the merger announcement, has dropped in the past six weeks to about L600 - creating serious arithmetical problems in the nuts and bolts of the merger. A temporary postponement had already been announced a week ago.
Turnover pounds Pre-tax pounds EPS Dividend
Boxmore International (I) 33.7m (23.1m) 5.48m (3.75m) 13.2p (10.9p) 1.62p (1.375p)
Freeport (F) 1.86m (-) 0.1m (0.07m) 0.7p (27p) nil (-)
Magnolia (I) 10.6m (8.41m) -1.34m (-0.31m) -30.38p (-5.39p) nil (nil)
McKechnie (F) 533m (420m) 45.3m (35.3m) 33.8p (27.1p) 11p (9.75p)
Scottish Metro (F) 18.6m (16.3m) 8.52m (11.3m) 5.91p (8.82p) 2.5p (2p)
Silk Industries (I) 6.44m (6.27m) 0.97m (0.87m) 5.6p (4.8p) 2.0p (nil)
Wolseley (F) 3.78bn (3.25bn) 245m (202m) 29.72p (25.39p) 9.8p (8.36p)
Yorklyde (I) 11.3m (9.22m) 2.05m (1.70m) 13.2p (11.4p) 2.65p (2.4p)
(F) - Final (I) - Interim (N) - Nine months
- 1 'Not suppost to cry': 9-year-old lists the worst things about being a boy
- 2 Lee Evans announces his retirement from comedy on The Jonathan Ross Show
- 3 Iggy Azalea responds to Eminem rape lyrics: 'I'm bored of old men threatening young women'
- 4 These grandmas smoking weed for the first time are wonderful
- 5 Pastafarian former porn star Asia Lemmon allowed to wear colander in driving licence photo
Duchess of Alba dead: Billionaire Spanish duchess who lived life by her own rules, dies at 88
New York snowstorm: Death toll rises to 10 as residents battle with further snowfall
These grandmas smoking weed for the first time are wonderful
Chelsea balcony collapse: Two people dead and six injured in London
Woman opens professional cuddling shop – gets 10,000 customers in first week
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Muslims pre-date Columbus in discovering America,' says Turkish president Erdogan
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Former Tory PM Sir John Major says 'we would not have an NHS without migrants'
Revealed: How the world gets rich – from privatising British public services
iJobs Money & Business
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...