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Roberto Gavazzi, the CEO of Italian insurance group Fondiaria, which is being sought as a merger partner by both SAI, another Italian insurer, and Fiat’s insurance subsidiary Toro (See IJ Website Jan. 11) reportedly favors a very “European” solution – merge with both of them.

According to London’s Financial Times Gavazzi stated that, “All three of us are too small separately – not for Italy, but in five or 10 years time, for the European market. We could merge with Toro, or we could merge with SAI, but I would prefer a merger of the three companies together.”

The problem may be that, although both companies want Fondiaria, they don’t particularly want one another. Even though they all have cross holdings in one another, they are not a happy family. The dispute pits Italy’s largest Industrial enterprise, Fiat, against the powerful banking conglomerate Mediobanca, which controls SAI, which had planned on acquiring 29 percent of Fondiaria, until it was blocked by regulators.

Toro’s bid is currently being considered by Fondiaria, and neither company has so far commented on Gavazzi’s proposal. If it were to happen, the combination would rank as Italy’s second largest insurance group after Generali.