Such a sale would open a new era for a company that isn't just one of the icons of Italian industry -- its Vespa gained global fame from its appearance in the 1953 film "Roman Holiday" -- but is also a nostalgic symbol for millions of Italians of their country's post-war development.

The preliminary agreement, which is expected to be completed in autumn, would hand 100% control of Piaggio to Texas Pacific for about 1.2 trillion lire ($652 million or 620 million euros), say the people familiar with the negotiations.

Closing a Difficult Chapter

The sale would close a difficult chapter for the group, which was controlled by Giovanni Agnelli, the nephew of Fiat SpA owner Gianni Agnelli. The younger Agnelli inherited control of the group from his mother'sfamily and, as chairman of Piaggio, was being groomed to take over the Fiat group when he died of cancer in 1997 at the age of 33. His mother, Antonella Bechi Piaggio, died this year, leaving control of the scooter maker scattered among a number of heirs, including Agnelli's widow, Avery Frances Howe.

With no family members interested in managing the $1 billion company, which also is just now emerging from a deep restructuring, they decided to cede control to the Americans. Credit Suisse First Boston is advising Texas Pacific, while IMI SpA is advising Piaggio shareholders.

The sale to Texas Pacific is the latest sign of a historic turnover in Italian industry, where family-run companies are selling decades-old groups to outside investors attracted to Italy's wealth of famous brand names and strong niche players. Italian industry is under unprecedented pressure to respond to the globalization of their markets and the fundamental changes Europe's common currency is bringing to doing business on theContinent.

This pressure has been particularly heavy in the motorbike and scooter sector, where a number of downtrodden yet still-strong Italian names have changed hands in the past year to end up under the control of foreign investors.

Basking in Ducati Success

Texas Pacific itself is still basking in the heady success of its turnaround of Ducati SpA, the 73-year-old maker of high-performance motorcycles it bought in 1996 when the Italian company was on the brink of collapse. The Fort Worth, Texas, investment group restructured the Bologna concern, brought it back into the black and engineered a stock listing in New York and Milan this year.

Similarly, US investment company Trident Rowan Group bought Moto Guzzi, a struggling motorcycle maker with a venerable brand name, and brought the company public this spring as part of a sweeping turnaround plan.

"At a certain point, Italian family-run companies reached a certain level of development and they imploded as they started diversifying andfound they didn't have the managerial power to hold it together," says Federico Minoli, chief executive of Ducati. A change in ownership "is inevitable because as the big families are becoming more modern, they want to attract outside management."

Industry analysts predict that Piaggio's future could resemble Ducati's recent past, with the added advantage that Piaggio is already profitable, whereas Ducati was on the brink of collapse when Texas Pacific took control in 1996. Both companies have strong brand names that have yet to be fully exploited.

For instance, the marketing opportunities for the Vespa name could be broad, even in markets as distant as the US. Furthermore, the sales opportunities in countries such as India and China, where Piaggio has so far only tested the waters, are strong. "It could all be about relaunching the brand," says one analyst who declined to be identified. "Vespa could become a global brand like Ferrari or Coke."

The Vespa gained international fame during thehappy-go-lucky 1950s in Italy, when it was featured carrying Audrey Hepburn and Gregory Peck on their film escapades through the streets of Rome in "Roman Holiday" and bearing camera-toting paparazzi in "La Dolce Vita." As the symbol of Italian design and elegance as well as quotidian reliability, Italians developed a deep attachment to the Vespa, many of whom still cherish models that are decades old.

The Wall Street Journal