TheChek News Flow

16-Sep-2019 12:34:08

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Lisa Jucca

MILAN, Sept 16 (Reuters Breakingviews) - An Italian road fiasco is slamming the credibility of one of the country’s most successful industrial dynasties. Atlantia ATL.MI, a $20 billion global infrastructure group that makes up nearly half the invested wealth of the Benetton family, is sinking deeper into a probe linked to a deadly bridge collapse in Italy. The damage risks infecting their sweaters-to-motorways empire.

Last year’s collapse of a bridge in Genoa managed by an Atlantia subsidiary killed 43 people, knocked Atlantia’s shares and turned the Benettons into figures of public disrepute. The situation worsened on Friday after police arrested three employees on charges that safety reports for some viaducts operated by Atlantia’s highways arm had been forged.

The probe’s turn comes at the worst possible moment for the Benettons, who rose to fame on colorful shirts and controversial advertising but earn most of their money today on infrastructure and restaurants. Italy’s new government softened threats made by the previous administration to revoke Atlantia’s lucrative motorway concession and spoke instead in support of a revision of the current terms. The new evidence may change that.

The Benettons, who own 30% of Atlantia, must quickly find a solution. Edizione, the family investment vehicle, is holding a board meeting on Monday. A first move might involve dismissing Chief Executive Giovanni Castellucci, the architect of the multi-billion acquisition of Spanish peer Abertis.

Change at the top would not, however, solve the Italian motorway headache: The judicial inquiry is likely to drag on for years and cloud the future of the toll concession. Selling the business now would also be difficult, as legal uncertainty would keep away buyers and warrant a deep discount.

There’s another option. Atlantia could spin off the Italian motorways to ring-fence the rest of its business. To appease Rome, the Benettons could also dilute their stake and make way for other shareholders, like Cassa Depositi e Prestiti, an investment arm of the state.

None of these options are possible with Castellucci still at the helm. But even if the Benettons sack him, it will do little to improve their reputation, and the health of their empire. The Benettons don’t have an easy off ramp for their Italian toll dilemma.