I Came, I Saw, I Gained Control

The foreign invader wheeled into Brussels last week in a shiny black Mercedes and swept immediately into a jammed press conference. Wearing a gray pinstriped suit and smoking a thin cigar, Carlo De Benedetti, the Italian industrialist, began confidently. "Allow me to introduce myself," he said. "I was born in Turin. I'm 53 years old. I'm not really sure where I live, but it's somewhere between Turin, Milan and airplanes." Then the high-flying entrepreneur proceeded to explain why he wanted to do what many proud Belgians viewed as the unthinkable, to gain control of Societe Generale de Belgique, their country's largest and most pervasive company. His ambition: to assemble the first giant pan-European holding company that would prove big and diversified enough to compete head-on with American and Japanese rivals.

De Benedetti, who is chairman of Italy's Olivetti and holds stakes in companies ranging from the Yves Saint Laurent fashion house to the Buitoni Perugina food giant, managed to grab a major interest in La Generale -- also known as Belgium Inc. -- while no one was looking. His announcement last week that he had acquired an 18.6% share (market value: more than $300 million) largely through his Paris-based holding company, Cerus, prompted hurrahs in Italy's financial community. "It was a brilliant operation, a theatrical coup," said Fiat Chairman Giovanni Agnelli, and Italian newspapers bannered triumphant headlines like DE BENEDETTI, KING OF BELGIUM. But the cross-border bid stirred far noisier wails of protest across Belgium. "Financial piracy!" declared La Generale's chief, Rene Lamy. GENERALE UNDER THE ITALIAN BOOT, screamed a headline.

Perhaps too late, La Generale is putting up a defense. The company issued $1.5 billion in new stock, aiming to dilute the value of De Benedetti's shares. A Brussels commercial court ruled the stock issue invalid, but the Belgian banking commission gave approval for the defense tactic, thus setting the stage for a legal and regulatory battle. Even Belgium's Finance Minister, Mark Eyskens, intervened. "We are not against Europeanization," he reportedly said. "You can do it, but you can't do it sneakily, breaking in like a thief in the night." In a hurriedly called meeting, Eyskens persuaded De Benedetti to limit his eventual share of La Generale to less than 25%, which will nonetheless give the Italian effective control over the company and with it a sizable chunk of the Belgian economy.

La Generale is part of Belgium's bedrock. The company was founded by King William I of the Netherlands in 1822, eight years before Belgium became an independent country. As the country's first central bank, La Generale printed its own paper currency until 1850. By the early 1900s, it was financing copper mining in the Belgian Congo (now Zaire) and the building of China's Peking- Hankow railway. With its headquarters in a stately turn-of-the-century building situated between the royal palace and the Belgian Parliament, La Generale today employs nearly 100,000 workers and holds interests in 1,261 firms, including the country's biggest banking, insurance, mining, trading and chemical concerns. Yet the company has grown unfocused and stagnant, depressing its profits and market value.