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Agnelli's brother, grandson shoulder heavy burden

By Christian Plumb

MILAN, Jan 24 (Reuters) - The two family members seen as Gianni Agnelli's successors at automaker Fiat assume a heavy burden -- salvaging a business empire that flourished in the patriarch's prime but stumbled as his health faltered.

Illness and suicide have claimed the generation that would normally have succeeded Agnelli at Fiat's helm.

In November 2000, Agnelli's own son Edoardo, who never came to terms with the huge weight of his family ancestry, committed suicide by leaping from a viaduct.

Gianni's younger brother Umberto, once passed over for the top job, is now seen as the main candidate to fill his giant shoes.

Umberto's influence grew last year as he became family spokesman after Gianni became too sick to fulfil the role. The death of his brother, announced on Friday, gives Umberto a chance to tighten his grip on the reins.

The Agnelli family control Fiat via their Ifi and Ifil holding companies, which jointly hold around 34 percent of Fiat.

But Umberto, born in 1934, is already close to retirement age. Many of those who still see Fiat's long-term future as a carmaker, far from a certainty given its troubles, see Gianni's 26-year-old grandson, John Elkann, as the eventual heir.

"The future of the car division really rests on the management of Fiat being able to restore some degree of profitability, and that doesn't change whether it be Giovanni or Umberto," said Nicholas Potter, an analyst at Theodoor Gilissen Securities in London.

Accustomed to making headlines in the sports pages as the vocal head of soccer club Juventus -- at one point criticising fans for jeering at the team -- Umberto then found his every word tracked by the financial press.

Educated as a lawyer, Umberto Agnelli's life otherwise has had little in common with the glamorous playboy image of his older brother and has dealt him heartbreak and disappointment.

ADVERSITY AND OPPORTUNITY

His first marriage to an heiress of scooter maker Piaggio, where Umberto served as chief executive for several years, ended in divorce.

Their son Giovannino, who took over at Piaggio and had been seen as the family's best prospect to take over at Fiat, died in 1997 of stomach cancer aged only 33.

Umberto then married a cousin of Gianni's wife and had two more children, but neither was interested in the auto business.

Boardroom prospects looked gloomy for Umberto, forced out of the line of succession by powerful investment bank Mediobanca , which demanded his replacement as a condition of a bailout during a Fiat crisis in the early 1990s.

With adversity came opportunity. Umberto took command at family holding company Ifil , and together with his right-hand man Gabriele Galateri set out to wean the company and his family's fortunes off its reliance on autos.

Ifil bought into the food, beverage and travel sectors, and became a model for Fiat's own diversification into electricity, insurance and other industries.

"I think he's clearly more aware that you cannot carry on as in the past," said Garel Rhys, a professor at Cardiff Business School's Centre for Automotive Research. "He would bring a greater financial realism to the table."

But Umberto has not always seemed to have a steady hand on the wheel at the carmaker. Last June he backed Galateri's appointment as the company's CEO but only months later helped engineer his downfall by backing a Mediobanca-backed shake-up that was eventually thwarted by Fiat's banks.

BURDEN OF EXPECTATIONS

Elkann, expected to inherit Gianni Agnelli's controlling stake in the family's holding Giovanni Agnelli & C, must now also adjust to being a lightning rod for press attention.

Forty years younger than Umberto, he has become highly visible, winning a seat on Fiat's board soon after Giovannino's death and taking a variety of journeyman jobs at Fiat, which saw him working on a factory floor in Poland and in a marketing role in France.

His lineage carries the burden of immense expectations, with Gianni Agnelli once saying Elkann, a fan of motor racing and e-commerce, represented "the continuity of the presence of the family in Fiat".

Fiat Chairman Paolo Fresco, who helped Elkann get a year of training at his former employer General Electric, said in a recent interview that he would "like to see him in a leading position at Fiat".

But with Italy's largest industrial group in a state of turmoil, it is unclear what kind of company it will be once Elkann, born in New York and raised in Britain, France and Brazil, is mature enough to take charge.

"Even if he has been trained for quite a long time, he has very limited experience in managing such a large company," said Giulio Brunetta, a fund manager at Alpe Adria Gestione Sim. "I don't know what kind of independence he has inside the company."