Putting On Heirs

CHRIS SISARICH/IDC FOR TIME
Ernesto Bertarelli, 37, leads Serono, the Geneva-based drug company once run by his late father Fabio

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Lagardere
LAGARDERE GROUP

From his roots in aircraft design, founder Jean-Luc expanded into magazine publishing. Today son Arnaud leads the charge into book publishing by the publicly traded PARIS-based holding company

Family's Stake: $250 million

Jean-Luc Lagardere trained as an engineer at Marcel Dassault's aircraft-design business in the 1950s and went on to run a small Dassault subcontractor called Matra. In 1980 he diversified into media by acquiring magazine group Hachette and today publishes 222 titles, including Paris Match, Car and Driver and Elle. A foray into TV almost bankrupted Matra, but it recovered, and the publicly traded firm now called Lagardere Group with $14 billion in annual sales is weathering the economic downturn. Through aggressive dealmaking, he has spun his stake in Matra into a 15% share of EADS, which makes Airbus jets. His son Arnaud, 41, is leading the growth of Lagardere's media division, with about $8 billion in annual sales. Last October Arnaud agreed to acquire the book-publishing arm of ailing Vivendi Universal for $1.25 billion giving Lagardere an estimated 70% of the French book market. In a strange twist, a shadowy Swiss-based firm with links to Iraq and possibly Saddam Hussein owns about 2% of Lagardere's shares, but the holdings were frozen in 1991.

Wallenberg
INVESTOR AB

Trouble with investments in Ericsson, ABB and technology firms has resulted in huge market losses in the past year for this family's industrial holding company, based in STOCKHOLM, SWEDEN

Family's Stake: nearly $1 billion

Sweden's Wallenberg family is one of the most powerful in Europe. Through family foundations, it controls or holds substantial influence over about 40% of the entire capitalization of the Swedish stock exchange. (Even the exchange is part of a company that the Wallenbergs control.) Investor AB, the family's industrial holding company, dates from 1916. It faced an unprecedented attack two years ago, when Swiss financier Martin Ebner built up a 10% stake and called for Investor to be broken up in the name of improving shareholder value. Ebner, overstretched financially, has since had to sell or reduce many of his holdings, including his stake in Investor. The episode was a harsh test for the latest Wallenberg generation (the fifth) to run the business. It is led by Marcus Wallenberg, 46, a shy Georgetown University graduate who took over as Investor's CEO in 1999, and his cousin Jacob, 47, who is vice chairman. The two are struggling to reverse huge losses in Investor's portfolio, whose net asset value per share almost halved last year as core holdings, including mobile-phone giant Ericsson and ABB, a Swedish-Swiss engineering firm, ran into serious trouble. The Wallenbergs' strategy: to use market weakness to boost their stakes in core holdings, among them bank SEB, Ericsson, ABB and appliance maker Electrolux. The Wallenbergs are making new investments in technology and have fostered a venture-capital arm. Those investments so far are losing money. But the young Wallenbergs hold to the motto used by their grandfather: "To move from the old to what is about to come is the only tradition worth keeping."

Weston
ASSOCIATED BRITISH FOODS

Fortnum & Mason is only the most elegant arm of this family's LONDON-based firm, which started out selling sliced bread

Family's Stake: $3.25 billion

In Britain the Westons are often referred to as the family that invented sliced bread. The founder of their retail business was a Canadian emigre, Garfield Weston, who created individually packaged loaves. His son Garry built publicly traded Associated British Foods (ABF) during the postwar years and acquired dozens of assets, including British Sugar and the luxury London store Fortnum & Mason. During Garry's 33 years at the helm, ABF's value soared by a factor of 30, and it is currently the biggest family-controlled company on the London Stock Exchange, with annual sales of $7 billion.

Before he died last year at 74, Garry Weston installed the firm's first top manager from outside the family. But each of Garry's six children is involved in the firm. Guy, 42, the eldest son, runs the holding company, Wittington Investments, which owns 54.5% of ABF. In 2001, Wittington bought back the 10% of Fortnum & Mason that it didn't already own. The second son, George (it's a family tradition for sons to be given names starting with G), 39, is deputy chairman of ABF, and Garth, 34, is chief of the company's Ryvita crispbread subsidiary. Two daughters, Jana, 41, and Cate, 40, work at Fortnum & Mason, while Sophia, 36, helps with the family's charitable foundation, which owns almost 80% of Wittington. So far, the ABF management team seems to work together cohesively, despite the potential awkwardness of heirs' reporting to an outside CEO.