MILAN (Reuters) - Fiat Chrysler Automobiles (MI:FCHA) is set to quit the publishing business to focus more on car making after agreeing to fold its media unit into L'Espresso group (MI:ESPI) to create a leading Italian publishing house.
In an all-share deal, FCA said it would fold its 77 percent-owned Itedi, which controls the Turin-based La Stampa and Genoa-based Il Secolo XIX dailies, into L'Espresso which publishes one of Italy's biggest dailies La Repubblica.
The carmaker will then exit the sector by distributing its 16 percent stake in the new group to its own shareholders, which include the Agnelli family's holding company Exor.
In a separate statement Exor (MI:EXOR), which controls FCA, said it would hang on to a 5 percent stake in the new group and would eventually reach an agreement with CIR, the holding group owned by the De Benedetti family that controls L'Espresso.
It was not immediately clear what power the Agnelli's would have in the future governance of the new publishing house which will be 43 percent owned by CIR (MI:CIRX).
The Agnellis have had long-time links to the De Benedettis and a shareholder pact might give them more influence than their stake would suggest going forward.
"CIR will remain the controlling shareholder of a larger and stronger group with significant profitability that will be ever more authoritative in terms of governance, content and the titles it owns," said CIR chairman Rodolfo De Benedetti.
Newspaper readership and advertising revenue have fallen sharply in Italy over the past seven years and sources have said Fiat Chrysler CEO Sergio Marchionne wants to focus his company's energies on the core automotive business.
Exor last year bought 50 percent of the Economist group from Britain's Pearson (L:PSON), which indicated a renewed interest in the press sector.
Depending on the agreement reached with De Benedetti, the L'Espresso deal might represent a significant shrinking of Exor's media profile within Italy, where newspaper ownership has long been viewed as a powerful, prestigious political tool.
The new combined group, with total revenues of around 750 million euros, will control some 20 percent of the domestic newspaper sector and might need to sell off some of its smaller, local content to get a green light from the antitrust authority.
In its statement, FCA also said it would be distributing to its own shareholders its 16.7 percent stake in RCS MediaGroup (MI:RCSM), the company that publishes influential daily Corriere della Sera.
Exor said it in turn would distribute to its shareholders the RCS shares it received from Fiat Chrysler.