The Entrepreneur
Heart in Europe, Eyes on Global Industry
Staunchly pro-Europe, Gardini championed making the Old Continent self-sufficient in food and energy. Through acquisitions and restructuring, he won himself a place at the table of globalization.
by Cesare Peruzzi

When he took the helm of the Ferruzzi group in 1980, Raul Gardini knew exactly the course he wanted to set. After twenty-plus years of experience working alongside his father-in-law Serafino Ferruzzi, the founder of the Ferruzzi dynasty and father of his wife Idina, and especially after the business decisions of recent years –the acquisition of Eridania, in Italy and of a controlling share in Beghin-Say (leader of sugar production in France and Italy), Gardini was very clear about one thing: the future of Ferruzzi was in industry. The roots and heart of the company were in Europe, but its orientation must be towards the global market. His immediate challenge was to transform Ferruzzi from an important global food trader into a major European multinational agroindustry.

The change in strategy was driven by Gardini’s personal vision as well as by the times. Staunchly pro-Europe, he championed making the Old Continent self-sufficient in food and energy. Moreover, his decisive move into the processing of agricultural raw materials for industrial purposes contained the seeds of the future Green Revolution and led Gardini and Ferruzzi to challenge the skepticism of many and the interests of a select few. The latter, dead set against any shift away from the economic and energy dependence on petroleum, would be the rock on which the Ferruzzi project would break apart ten years later. Gardini recognized this possibility at the time and wrote of it in a letter to the Milanese business daily Il Sole 24 Ore, published 23 June 1993, a month before his death.

Ivan Gardini father of Raul

The long letter sent by Gardini

I met Gardini in January 1980 when I was working for Il Mondo, the business weekly of Il Corriere della Sera Group. I had met with his father-in-law at the commodities exchange of Milan and written numerous articles about the Ferruzzi group, whose acquisition of Eridania catapulted it into the news. Gardini agreed to speak with me at a restaurant in Bologna, where he immediately showed me what he was made of, as a man and an entrepreneur: open, responsive, ironic, ready with a wisecrack like a good Romagnolo, and generous in the way he engaged me with his thoughts and plans. He had the visionary streak of entrepreneurs driven to accomplish major goals. He was passionate, demonstrated an impressive grasp of agriculture and the environment, and maybe even had a bit of the dreamer in the way he underestimated obstacles, though was clearly now one of the major figures in his sector in Europe and globally. In short, he told me that the degradation of the planet had to stop, there was but one earth and it must be protected, and a healthy and well-managed agriculture is the foundation of all economic and social development, past and future. The Ferruzzi group, he told me, would play an important role in this process on a global scale. I was a 26-year-old economic journalist and this meeting opened a window on a vast new horizon. I left the restaurant with the conviction that this is how entrepreneurs should be: courageous and visionary.

In the months following the sudden death of Serafino Ferruzzi in a plane crash in December 1979, Gardini overflowed with both ideas and courage. He was especially aware that the golden age of importing agricultural products from producers to consumer markets –i.e., from North and South America to Europe- was inevitably coming to a close. The conditions that had made possible the explosive growth of Ferruzzi were gone: in the aftermath of the Second World War, Europe had needed to import almost everything and depended on the rest of the world to feed its people and its livestock, importing wheat, barley, soy, and soy flour. Now Europe found itself exporting these same products, except for soy.

​In the early 1980s the silos of the European Union were overflowing after three decades of the Common Agricultural Policy (PAC) which guaranteed farmers a minimum income. This policy was a success story of industrial strategy that especially benefitted the farmers of France, northern Europe and Italy’s Pianura Padana. Ending the former practice of destroying agricultural surpluses to keep prices high, it ushered in a new phase of development tied no longer to imports (except for soy) but to exports and processing. Gardini immediately recognized the new situation and, strengthened by the recent acquisition of Eridania (in addition to the processing plants of Italiana Olii e Risi, which produced vegetable oils and flour for human and animal use), moved decisively into the industrial processing sector. What made this financially possible was to a large extent the stock exchange.

Photo courtesy of Ferdinando Scianna

Ferruzzi Group: A new global company
Video Interviste

“When I took over Ferruzzi from my father-in-law, the group was essentially an international trading company,” Gardini writes in his letter to Il Sole 24 Ore. “Of the 3 trillion lire in sales, industrial production did not exceed 20 percent, and this was largely from industrial activities acquired the year before. It was run basically as a family business, each individually managed. There was no consolidated balance sheet or even a complete chart of its various holdings worldwide. The stock market was something mysterious that we had only begun to explore with the acquisition of Eridania and Agricola finanziaria. The growth of the company in the 60s and 70s was essentially due to the genius and hard work of its founder. But it was a ship that was not fit for the 1980s. For a start, trading itself was undergoing a dramatic transformation. Second, the industrial sectors we were involved with, like sugar and seed oil, were in disastrous shape. Finally, because the structure of the group was essentially “archaic,” its companies were generally undercapitalized, and exposure to the banks was relatively high with the personal wealth of the family serving as collateral.”

But rather than content himself with the value of the company as it was and avoid taking on too much responsibility, Gardini faced the problem squarely with the ambition of an entrepreneur and not a rentier. It should be recognized that Gardini was born into a family of rich farmers of the Romagna region. His first experiences were managing the company of his father, and when he met his future wife, the wealth of the Ferruzzi and Gardini families was roughly equal. Raul entered the Ferruzzi group in 1957 with a 10 percent stake purchased with money given to him by his father, who didn’t want him to be a mere employee of the company. Initially his focus was cement, then oil and fats (he became the European representative in this area). Eventually he became the right-hand man of Serafino, always representing the more pro-European, pro-industry elements of the group. Thus it is not surprising that in 1980 he appealed to the family and the stockholders to take a more challenging but also exciting approach, and “use the human, cultural, and financial capital of Ferruzzi to become a modern company,” as he wrote in the letter to Il Sole 24 Ore a month before his death.

The 1980s saw a boom in industry. In this decade, Ferruzzi plays an important role in the strengthening and consolidation of the national sugar sector and takes a controlling stake in Beghin-Say in France, carrying out the most important industrial regrouping in Europe in this area. At the same time, Ferruzzi reorganizes and strengthens its vegetable oil operations, and implements the largest manufacturing regrouping in Europe with the acquisition of many smaller struggling companies in Italy, the colossal Lesieur in France, Koipè in Spain, and Central Soya in the US. It also launches the “Soy Project” which thanks to the backing of Brussels gives a significant boost to the cultivation of soy in Europe, making Italy the number one soy producer on the continent in 1988 and lifting the fortunes of industry throughout. Finally, Ferruzzi jumpstarts the activities of CPC Europa, taking the lead in starch production in Europe. By the end of the ‘80s, the turnover of the Ferruzzi industrial holdings topped 13 trillion lire, inverting its trading/production ratio of ten years earlier.

‘None of this would have been possible without the convergence of two factors: access to the real estate market and to bank credit. No self-respecting entrepreneur can do without them,” Gardini states. “The stock market boom of 1985-87 intensified a process that was already quite far along and whose most significant expression in terms of the reorganization of the group was the listing of all of the activities of the Ferruzzi family and the first presentation of consolidated balance sheets. In short, we went public, with all of our papers in order, officially stating our strategies and goals. The market and its operators gave us confidence and credit, which allowed the group to grow in a balanced fashion without getting ahead of itself. This was partly because with each acquisition we eliminated any non-strategic activities, like the paper divisions of Beghin-Say.”

In its race for a prominent position in the European and Italian industrial landscape, the Ferruzzi group had a powerful ally: the Mediobanca of Enrico Cuccia, which (with Comit and the Banca di Roma) was the primary financial backbone and Ferruzzi’s strategic point of reference. It was Mediobanca that in 1985 opened the door to the capital of Montedison for the group. Two years later, Gardini decided to try to take control of the chemical giant with a rapid and effective maneuver that neither Cuccia nor the guardians of the Italian political equilibrium were pleased with. Gardini saw in Montedison a concrete possibility for the integration of the chemical sector and agriculture that research had shown was viable: the objective was the production of new materials from agricultural inputs as opposed to petroleum. In other words, the dream of a “green chemistry”, which would be the perfect fusion of Gardini’s ideas and his business projects.

The takeover of Montedison in 1987 had a price tag of 2.5 trillion lire, a staggering sum that some observers found excessive, Gardini notes in his letter to Il Sole 24 Ore. “My valuation of the assets of Montedison, however, was 12 trillion lire. And Morgan Stanley, which I had perform an appraisal after the acquisition, put the break-up value at 15 trillion. These figures were promptly shown to be correct. Suffice it to say that the sale of Standa, Mira Lanza and Rol netted 1.5 trillion, which immediately balanced the Ferruzzi books. Later there was the sale of the 40% of Enimont stock (for 2.805 trillion lire). The pharmaceutical division drew an offer of 2.8 trillion. Himont had a valuation of 5 trillion, and then Ausimont and Antibioticos of another trillion. In short, the takeover of Montedison was an absolute bargain that swung Ferruzzi to the top of not only Italian but global industry. I continue to believe that the idea of creating a major Italian chemical group by combining Enichem and Montedison was the right strategic plan. It failed because the political class did not want to release its grip on the sector, and because of my own intransigence, which, however, I do not regret.

But the acquisition of Montedison was to be the beginning of troubles for Gardini and for Ferruzzi. On the one hand, it gave Gardini the possibility to sit at the table with the major figures of international industry and initiate projects in research and the integration of industry and agriculture that the entrepreneur cherished: with Tencara, developing new experimental products for sailing in connection with his America’s Cup challenger Il Moro di Venezia, and especially directing Novara’s research centers to develop the first plant-based biodegradable plastics. However, the Montedison venture also sowed the seeds of the creation of Enimont, a joint venture with Eni, which, far from bringing the chemical firm into private hands -Gardini’s goal- became the means by which the chemical division was taken from him and ultimately was the rock against which Ferruzzi was shipwrecked.

Documenti: Il Caso Enimont

“In 1991, after the failure of the chemical project, I saw that it was necessary to rethink the future of the group,” Gardini wrote in June 1993. “It was similar to the situation we had faced in 1980. The path forward was clear: unwind our remaining operations in the chemical sector for which we could find buyers. This would have allowed us to drastically reduce Montedison debt. I also intended to sell off our assets in publishing as well as Calcestruzzi, for which we received an offer of 800 billion lire. Finally I proposed purchasing for 900 billion lire a controlling position in Sociètè Centrale d’Investissements (SCI), a French holding company listed on the Paris Stock Exchange that we already owned stock in. SCI would take a position of 60% of Serafino Ferruzzi Srl for 1.6 trillion lire. The Ferruzzi family would have pocketed 700 billion in cash while still retaining control of the group and keeping a 40% interest in Serafino Ferruzzi Srl, which in my opinion we should have used to create through a foundation a parachute for future generations to protect their inheritance.”

But the plan was not approved and Gardini and his wife were forced out of the Ferruzzi group with a payoff of 505 billion lire.

“At the time we left Ferruzzi, in June 1991, the total debt of the firm was 7.8 billion lire, of which only 1.2 billion belonged to Ferfin. The debt/equity ratio was well below 1. The consolidated balance of Ferfin as of 31 December 1990 showed a total net financial liability of 6.665 trillion, as opposed to 8.077 in 1989 and 9.864 in 1988: a clear downward trend. Its assets at the end of 1990 stood at 8.763 billion, with a debt/equity ratio of 0.76.”

The dream of a green chemistry had gone up in smoke along with the Enimont utopia and Gardini’s work in the Ferruzzi group – two facts that would within a few years produce the poison fruits of the Tangentopoli kickback scandal investigations. In that moment, fresh from the divorce with Ferruzzi, Gardini showed that he had the desire, the ideas, and the ability to start over. In the book of interviews that we did together in the summer of 1991, I asked Gardini why he never slept more than five hours per night. His answer: “Because I enjoy being awake far more. I go to sleep worried about waking up. And I go to sleep only when I am very tired. If I go to sleep tired I know I will sleep well. When you know you have done your job well, you sleep better. If you have no regrets and your conscience is clear, so much the better. And in the morning when you get up early, you say: good, let’s get back to work.” And he got back to work.


Rassegna Stampa

With the proceeds from the sale from his wife’s shares in Serafino Ferruzzi Srl (23%), he created Gardini Srl and bought a controlling position in SCI (the very move he had proposed for Ferruzzi but that had been blocked by Idina’s brothers.) The stated goal was to transform SCI into a true industrial holding company. Working through SCI, he moved into meat and cocoa production in France, buying Vital-Sogeviandes and Cacao Barry and becoming the top European producer in both areas. He also led the mineral water sector in Italy (with the brands Levissima, Recoaro, Pejo and the distribution of Fiuggi). Elsewhere in the food sector he took control of Caffè Hag, Faemino, Digerselz, Pandea, and the frozen food brands Arena, Brina and Mare Pronto.

Gardini then tried to take over the publicly traded Italian food group SME. Had he succeeded, Gardini would have found himself at the head of a colossus with over 10 trillion lire in sales. But he was blocked by the Italian political establishment. Even his old ally Mediobanca, which he had fallen out with since the Montedison venture and during the Enimont period, blocked an attempted reconciliation with the Ferruzzi family that had seemed within reach. It was in this period that he wrote the letter to Il Sole 24 Ore. That was to be the entrepreneur’s last public statement.

Cesare Peruzzi, a journalist, was the head of the press office of the Ferruzzi group from 1985-1986. He wrote a book about the company titled “Il Caso Ferruzzi” (Edizioni del Sole 24 Ore, 1987). In 1991 he wrote with Raul Gardini “A Modo Mio” (Mondadori Editore).