Using His Head

When Italy's Pietro Nenni was asked last year what price he demanded in return for supporting a center-left coalition government, the old Socialist leader growled: "The head of Giorgio Valerio." The head belongs to the aristocratic managing director of Societa Edison, then Italy's largest public utility holding company. Nenni got his price--the country's power industry was nationalized--but Giorgio Valerio kept his head, and is busy proving that he knows very well how to use it.

Corporate Shells. When Edison surrendered its last power companies to the government in July, many Italians assumed that the 80-year-old parent company would go out of business. But Edison, long connected in the public mind only with power, had quietly expanded since the war into textiles and chemicals. Under the nationalization order, the former power companies were left as corporate shells, and the government promised to pay $725 million to their shareholders during the next ten years. Valerio spied an opportunity: he merged these shells into a new operating company so that the $725 million indemnity could be used for building up a company rather than simply for liquidating the old ones.

As Valerio explained to shareholders last week, he has taken the three biggest power companies and merged them with 13 other Edison-controlled firms, ranging from farm-machinery makers to chemical producers, to form a diversified industrial empire. Its initial capital base is Italy's biggest--$485 million--and Valerio intends to increase it to $705 million within five years.

Valerio's new company is already building a plant near Caserta to produce new building materials developed in Russia and another in Salerno to make aluminum products. Valerio has set up a division to manufacture calculating machines, linked an Edison oil outfit to a U.S. drilling company, and bought a slice of a big Italian pasta maker. But Edison's main thrust will probably be into chemicals, which form the largest base of the new combine.

New Confidence. For tall, aloof Giorgio Valerio, son of an Italian steelman and a wealthy white Russian, Edison's rebirth was a proud moment after months of anxiety during the nationalization crisis. His victory gave a lift to the Milan exchange, which has been dormant for months; it also heartened Italy's nervous businessmen, who have been deeply depressed ever since last year's leftist turn in politics. Crowed one Italian industrialist: "They could nationalize electricity, but they couldn't nationalize Valerio."

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