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Fiat chief dies before key meeting

At one time Agnelli controlled a quarter of the entire Italian stock exchange worth $25 billion.
At one time Agnelli controlled a quarter of the entire Italian stock exchange worth $25 billion.

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Should the Agnelli family give up control of Fiat?


TURIN, Italy (CNN) -- Giovanni Agnelli, Fiat's driving force and one of Italy's most powerful businessmen, has died after a long battle with cancer.

His death came hours before a meeting on Friday of family members, who own about 30 percent of the ailing Fiat empire, at which they were set to hand over power of the car maker to his brother Umberto.

The move was expected to reinvigorate the Agnelli family's role in Fiat, which is struggling to recover from a billion-dollar loss.

The 81-year-old, who had turned the small company into a global powerhouse in the 1960s and 70s, had been due to chair the gathering.

Agnelli, who was still the car maker's honorary chairman, had been suffering ill health and last year went to the United States for treatment for prostate cancer.

"Giovanni Agnelli died in his house in Turin after months of illness," the family said in a short statement on Friday. "His wife Marelli and daughter Margherita and her family were present."

The Turin-based auto company, founded by his grandfather in 1899, is the biggest jewel in a vast, family-controlled financial empire with interests in aircraft production, steel, chemicals, cement, shipping, insurance, real estate, department stores and vermouth.

As Italy's biggest private employer, Fiat is a key factor in the country's economic development, and owns Alfa Romeo and Lancia as well as being a majority owner of Ferrari.

But Agnelli's horizons stretched far beyond the Italian peninsula. He found new markets for Fiat in Latin America and Eastern Europe and pioneered industrial penetration of the Soviet Union by building the largest Western-designed plant in Russia, an auto factory at Togliattigrad on the Volga.

But Fiat has fallen on hard times recently as falling demand for its cars pushed it into the red. The company's stock fell to 20-year lows in December and Fiat was forced to lay off more than 8,000 workers as part of rescue plans.

After months of rumours of foreign mergers and buy-outs, Fiat struck a deal with General Motors Corp, selling 20 percent of its auto operations to the Detroit-based automaker with an option to sell the remaining share to GM by 2004.

With Agnelli's death his brother Umberto, 69, looks set to take over the driving seat. But Gianni would have liked his grandson John Elkann, who is still in his mid-20s, to replace him. Reports have said Elkann could be named Fiat's vice chairman if his uncle, Umberto, gets the top job.

Fiat's stock rose 4.8 percent to 8.55 euros after Gianni's death. Analysts believe his death could prompt radical change at the ailing group and a possible sale of Fiat Auto to General Motors Corp (GM).

"His death means we have a completely different situation," an unnamed analyst told Reuters. "It is now an open question what will happen to Fiat Auto because he was the man perceived as wanting to hold on to it."

Agnelli was to lie in state at the Fiat complex in Turin until the funeral, which was to be held in strict privacy.

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