For half a century, Italy’s Benetton family has preached compassion through eye-popping ads for its eponymous clothing line that have included photos of a dying Aids patient, a black woman breastfeeding a white baby and, most recently, African immigrants being rescued at sea.
But now the Benettons themselves are the focus of public outrage after at least 43 people died when Genoa’s Morandi Bridge collapsed on Tuesday, threatening part of the family’s other, much more profitable business running airports, turnpikes and roadside diners from Santiago to Rome.
Leading members of Italy’s new populist coalition government have begun the process of revoking the lucrative toll license held by Atlantia SpA, the family-controlled company that operated the bridge, and want its chief dismissed. The threats triggered a selloff that’s wiped about 5.9 billion euros ($6.7 billion) off Atlantia’s market value in the less than a week, and fueled a backlash on social media, where scores of posts accuse the Benettons of pursuing profit over safety.
The Benettons didn’t comment until Thursday, when they issued a statement via holding company Edizione Srl. expressing “deep sympathy” for the victims of the disaster and vowing to work with authorities to determine the cause, while emphasizing that Atlantia and its Autostrade subsidiary have invested more than 10 billion euros in Italy’s roads over the past decade.
Funding Plan
Atlantia Chief Executive Officer Giovanni Castellucci followed up Saturday with a pledge to rebuild the bridge within eight months and provide an initial 500 million euros to alleviate the suffering of victims, not including possible direct compensation payments. That’s about half of what the company returned to the Benettons and other shareholders last year.
For Enrico Valdani, a professor of marketing at Bocconi University in Milan, the actions may not be enough to ease tensions with the government or win back the trust of the populace, much like United Colors of Benetton initially balked at taking responsibility for a cave-in at a Bangladeshi garment factory, where it sourced shirts, that killed more than 1,100 in 2013.
“They made a mistake by not promptly clarifying their alleged role in the fatal bridge collapse,” Valdani said by phone. “What the family now urgently needs is a straight plan of communication and crisis management. They need to demonstrate the company acted in good faith or admit any possible fault.”
A statement from the Benettons on Saturday, a day of mourning, said their thoughts were with the loved ones of the deceased. At the same time, Chairman Fabio Cerchiai said he personally hoped Castellucci, 59, will remain in the job, adding that the CEO has the support of the board and investors.
Representatives met with executives and lawyers on Friday to prepare the initial funding package, and there’ll be meetings in Rome this week to discuss the causes of the tragedy, according to people familiar with the situation.
Global Force
Long-celebrated in their native Treviso, a northeastern city of 85,000, for their rags-to-riches story, the Benettons last month suffered the loss of the youngest of four siblings who founded the apparel company in 1965, Carlo, who died of cancer at 74. He’s survived by Luciano, 83, Giuliana, 81, and Gilberto, 77, all of whom remain active stewards of the family’s various investments.
Luciano founded the company by selling sweaters out of small store in Treviso that were knitted by his sister Giuliana. Within two decades the offspring of a bicycle shop owner had become a global force in fashion, both for their vibrant clothing and provocative ads that occasionally riled the Catholic Church. The Vatican once took legal action to halt a campaign that featured a doctored photo of the pope kissing a Muslim leader.
Gilberto, who runs the clan’s finances, started to diversify in the 1990s, making purchases in a wave of privatizations that produced the bulk of its current fortune. The family now holds about 12 billion euros of assets, including a 30 percent stake in Atlantia, which became the world biggest toll-road operator this year with the acquisition of Spanish rival Abertis.
The strategy proved prudent. Their clothing chain has struggled to compete with upstarts like Inditex SA’s Zara brand and lost 180 million euros last year. In 2015, the family sold its stake in another major retailer, World Duty Free SpA, to Basel, Switzerland-based Dufry AG.
Last year, the siblings hired former Telecom Italia SpA Chief Executive Officer Marco Patuano to revamp their investments, reduce their dependence on Italy’s sluggish economy and pursue a more global strategy.
Eurotunnel Stake
About 45 percent of the group’s revenue came from abroad last year and that share is even greater now with Atlantia’s purchase of Abertis, which operates in South America and France as well as Spain. The Benettons also became the biggest owner of Spanish mobile-phone tower operator Cellnex.
Separately, Atlantia bought a billion-euro stake in Eurotunnel — now Getlink SE — the operator of the underwater link between the U.K. and France, and won the right to manage Nice’s main airport. The company is also considering spinning off Autogrill’s North American division, which accounted for more than half of the international restaurant chain’s 4.6 billion euros of sales last year.
The Benettons have done well pivoting away from their flagging brand and will likely weather the current storm over the Morandi Bridge disaster, according to Ugo Arrigo, a professor of public finance at Bicocca University. He said he doubts the government will make good on threats by some officials to pull the toll-road license held by Atlantia, which operates half of Italy’s motorways.
“The government has been very generous in granting the family lucrative motorway tariffs over the past two decades,” Arrigo said from Milan.
Atlantia shares renewed their decline after the government on Friday sent the company a letter formally beginning the process of withdrawing the concession. The stock was down 8.1 percent to 17.77 euros as of 9:38 a.m. in Milan on Monday, after a delayed opening.
Deputy Prime Minister Luigi Di Maio reiterated the plan on Saturday after Autostrade offered an initial 500 million euros in funding to help victims and said it would rebuild the bridge in eight months. The government is moving to re-nationalize the highway system, and is studying passing a fast-track law in parliament, La Repubblica reported.
La Repubblica had reported on Friday that Atlantia was in informal talks with Italy that could result in fines and other commitments, but would stop short of the seizure of the toll-road concession held by Autostrade.
The tragedy could accelerate the family’s plan to have more financial investments and fewer industrial businesses to manage. Gilberto Benetton has indicated that in the future the holding company should operate more in the manner of a sovereign wealth fund.
This article was provided by Bloomberg News.
