Family challenge to Delfin governance tests stability of Italy's Del Vecchio empire

By Elisa Anzolin and Valentina Za

MILAN, Oct 29 (Reuters) - Heirs to late Italian magnate Leonardo Del Vecchio have stepped up efforts to gain a greater say in family holding company Delfin, the hub of a business empire whose investments include eyewear giant EssilorLuxottica, Italian insurer Generali and lender MPS.

Since the death of Luxottica founder Del Vecchio in 2022, Luxembourg-based Delfin has been run by an independent board whose members are appointed for fixed terms and largely shielded from the influence of the heirs by the holding company's strict governance rules.

Delfin is the largest shareholder in EssilorLuxottica, whose brands include Ray-Ban, with a 32.4% stake, and it has been a key player in Italy's ongoing banking consolidation.

In the latest challenge to the structure, three of Delfin's eight investors have asked a court in Luxembourg to change a provision in the bylaws that effectively subjects any changes in the board composition to a unanimous shareholder decision, two people close to the matter told Reuters.

The proposed changes would render sufficient a two-thirds majority, equivalent to the vote of six Delfin shareholders.

Leonardo Del Vecchio divided Delfin ​equally among his six children, as well as his widow and her son from another marriage.

Divisions between the eight heirs, who include the high-profile Leonardo Maria Del Vecchio, have left the board with greater scope to call the shots, and Delfin has remained a steady long-term investor in its various companies despite the family squabbles.

However, the challenge to Delfin's governance, led by Paola and Luca Del Vecchio and fellow heir Rocco Basilico, could have repercussions on the investment portfolio, analysts said.

"Governance concerns at Delfin have spilled over onto EssilorLuxottica," Bernstein said in a note last month.

Instability at Delfin is also widely seen as having played a role in the vehicle's decision to back a takeover bid for MPS by Intesa Sanpaolo, with bankers saying MPS's defence strategy was too complex and risky to embark upon without a united front.

Shareholders in MPS vote on the strategy on Thursday and are expected to sink the defence plan after it lost Delfin's support.

Under the structure left by the late Del Vecchio, key matters are in the hands of the board, unless the eight heirs, who each own 12.5% of Delfin, can reach a unanimous decision or a very wide agreement.

In a growing source of frustration for some of the heirs, Delfin shareholders have been unable to muster the enhanced majority needed to raise the 10% cap on profit distributions. Delfin's 2025 profit totalled €1.5 billion.

In recent months, Leonardo Maria Del Vecchio has attempted unsuccessfully to buy out two of his siblings to help break the deadlock. Delfin itself is also weighing the purchase of some of its investors' stakes.

Delfin is chaired by EssilorLuxottica CEO Francesco Milleri, the late Del Vecchio's closest aide, while Romolo Bardin, another longtime Del Vecchio lieutenant, serves as CEO.

Bernstein analysts said tussles over Delfin governance could distract EssilorLuxottica's management, which is battling a share price plunge.

Piling pressure on the board, Delfin shareholders in June secured the appointment of two board observers who must be invited to all board meetings and may participate in discussions, although they have no voting rights.

Milleri has repeatedly come under attack from Leonardo Maria Del Vecchio who has left his position at EssilorLuxottica after falling out with the CEO.

Before the latest legal challenge to its bylaws, Delfin shareholders previously managed to remove restrictions that stopped them from transferring their Delfin stakes into an external investment vehicle.

In this way they could, for example, more easily raise funds using the stakes as collateral.

Two shareholders have already transferred their stakes into separate corporate vehicles and three others are set to follow, moves which may affect Delfin's ownership structure over the long term.

(Reporting by Elisa Anzolin and Valentina ZaEditing by Keith Weir)