A white-hot challenge like the one between Mediobanca e Caltagirone which is inflaming the spring of Italian finance for the control of Generali hadn't been seen for a long time. The stakes, financial and at the same time of power, are really high: Generali is the first Italian insurance company and one of the leading stocks on the Stock Exchange, but also one of the major guardians of the Italian public debt, having in its portfolio 63 billion euro of Btp. To trace a clash of the same dimension in the heart of Italian capitalism we have to go back to the last century, and exactly to February 1999, when Roberto Colaninno's Olivetti - with the support of the Brescian buccaneers led by Chicco Gnutti, of the ineffable Mediobanca and above all with the decisive political support of the D'Alema Government - he launched the public tender offer for a debt of 102 trillion lire on Telecom Italia, which, leaving the leading Italian telephone company up to its neck in debt, ended up overwhelming it and causing it trouble up to the present day .
All the numbers of the two floors that must be taken with a grain of salt
In December Philippe Donnet – the CEO of Generali who is running for a third term and who enjoys the full support of Mediobanca, the Lion's first shareholder – presented its 2022-24 plan and last Friday Caltagirone, which is the second largest shareholder of Generali, did the same with its counterpart.
Donnet's plan
In summary, the Donnet plan moves in the name of continuity and envisages a net profit of 3,48 billion euros over the three-year period (up 6-8 per cent), investments in technology of 1,1 billion, resources to be allocated to acquisitions of 3 billion, cash flows of 8,5 billion and dividends between 5,2 and 5.6 billion euros.
And the Caltagirone counter-plan
Having been presented later and born from the challenger, the Caltagirone counter-plan presents more ambitious numbers on paper: 4,2 billion in net profit, investments in technology equal to 1,5-1,6 billion, 7 billion for acquisitions (of which 2,5 .9,5 to debt), 10,5-5,2 billion in cash flows and between 5,6 and XNUMX billion in dividends.
Pay attention to the numbers
However, the numbers must be taken with a grain of salt, because it is one thing to propose plans and another thing to know how to implement them. From this point of view, if on paper the numbers of Caltagirone are more challenging, in terms of the feasibility of the plan, the track record benefits Donnet, who has two three-year strategic plans to his credit "successfully completed, hitting or exceeding any turn all the objectives, financial and industrial, announced to the market”.
Do you prefer Donnet's safe second-hand or Costamagna's highest bar?
Basically, the Generali meeting on 29 April will have to choose between two alternative plans but also between two different management styles – the tested one of Donnet and the more aggressive one of the challengers – and two different teams. In case of victory, the former, which has its absolute leader in Donnet, can count on a new president, Andrea Sironi (also president of the Italian Stock Exchange), on a renewed composition of the board which includes renowned professionals, and on a tested but on average young management, in which the CEO of Generali Italia stands out above all (Marco Sesana), that of Banca Generali (Gian Maria Mossa) and that of Generali Deutschland (John Liverani, called in recent days to replace ad interim also the head of Generali Austria and Eastern Europe Luciano Cirinà, a surprise candidate on the Caltagirone list).
In turn, Caltagirone has nominated a high-profile independent banker like Generali for the presidency Claudius Costamagna, former top manager of Goldman Sachs and then president of Cassa depositi e prestiti, and in the CEO chair as an alternative to Donnet, one of the main collaborators of the current head of the Lion, the Trieste Cirina, whose candidacy in the competing list would certainly have been more elegant if it had been preceded by his resignation from the insurance company in which he worked for so many years. Caltagirone has also gathered leading professionals for the new board, including Flavio Cattaneo – former CEO of Terna, Rai, Telecom Italia and Ntv – and promises to choose the new General Manager from among the current management of the Lion.
The weak point of Mediobanca and that of Caltagirone
Both the plan and the team supported by Mediobanca and those branded Caltagirone aim for growth for the Lion over the next few years, both through greater generation of profits and through extraordinary M&A operations: in a more sober way (and without creating new debt) in Donnet's logic; in a more aggressive and ambitious way (but also with more debt) in the logic of Costamagna, which inspired and still inspires the Caltagirone strategy.
But there is an inescapable weakness in both Mediobanca and Caltagirone, which has its roots in the last twenty years. Aiming for greater growth for Generali is commendable and one could say that it is always better late than never, but what's the point of doing it now, in a much more complicated context and where possible prey are unattainable, after having denied the Lion the means to grow for so long? Let's not forget who Generali is the only major European insurance company to have never launched a single capital increase in recent decadeswhile continuing to distribute dividends. Anyone who talks about growth today and forgets this essential point cannot claim great credibility.
But whose is it then? responsibility for the failed recapitalization of Generali? In the first place of Mediobanca, and not only by Alberto Nagel, CEO since 2007. The Milanese institute has always been the first shareholder of Generali, but – without going to dredge up the stormy clashes between Enrico Cuccia and Vincenzo Maranghi on the one hand and Alfonso Desiata and Antoine Bernheim on the 'other – has always deferred the growth of Generali to his advantage, his interests and, let's face it, his power games. It would be curious to know not only why Mediobanca took sides in favor of the debt takeover bid (who knows if the frictions with Fiat degli Agnelli had something to do with it), but also why it had previously induced Generali to invest in a all foreign as that of telecommunications.
In other words, Mediobanca was by no means a good shareholder of Generali, but a brake on its development, as evidenced by the refusal to make available to Leo the means that would have allowed him to grow when it was easier than now. But if in the history of Generali Mediobanca ends up in the dock, not even Caltagirone, despite having minor responsibilities, can be acquitted. The Roman entrepreneur has been a member of Generali's board of directors since 2007, but it does not appear that he has ever fought to recapitalize the Trieste-based company and, until the breakdown on the Cattolica acquisition in 2020, the board minutes say that he approved all strategic plans of Generali, all the appointments and all the extraordinary operations, including some disposals that weren't exactly a deal for the Leone.
The vices of Mediobanca and Caltagirone's past obviously do not affect the personal credibility of top managers of the caliber of Donnet and Costamagna, but they can hinder their action and pose an unavoidable question to the two main shareholders of Generali: do you want to make Generali grow? Great idea, but you could have thought of it sooner.
