[Fuldagap]

Fiat Chrysler Automobiles has just announced its plan to spin off Ferrari. The move will put 10 percent of Ferrari on the U.S. and European stock exchanges next year, with the remainder going to current Fiat Chrysler stockholders.

In a press release, Fiat Chrysler’s board of directors cite the move as part of “a capital plan appropriate to support the Group’s long-term success.” In the same statement, Fiat Chrysler CEO Sergio Marchionne said, “as we move forward to secure the 2014-2018 Business Plan and work toward maximizing the value of our businesses to our shareholders, it is proper that we pursue separate paths for FCA and Ferrari."

Fiat, which acquired Chrysler earlier this year, has owned Ferrari since 1969.

Since 1991, Ferrari was led by now-former CEO Luca Cordero di Montezemolo, who left in a huff due to disagreement with Fiat Chrysler’s Marchionne over Ferrari’s future. On his way out, Montezemolo volleyed criticism at the notion of expanding Ferrari’s production base, calling it “the end of an era,” and telling Bloomberg that “Ferrari is now American.” Montezemolo’s resignation left Marchionne as Ferrari’s CEO.


via www.popularmechanics.com


Veteran Luca left Ferrari F1 recently. Tough days ahead for Ferrari or better ones coming, only time will tell.

[DicKy]

O M G ! ! !

Let it be for the good, and though highly unlikely given the circumstances and divesting conditions, hope it doesn't end up under the 'evil empire'

[Stiggy]

Nope. Now the company is going to work to please the shareholders and make them money.

Can anyone say Ferrari SUV?

[CrAzY dRiVeR]

Is it just me, or the current FIAT management is the most confused ever?

First a complicated model sharing strategy with Chrysler, then a huge delay in bringing much needed replacements for their base models like Punto and Linea, then a confused model strategy centred around the iconic 500, and now this!

And I'm not even starting with the India plans!

[zenren]

Originally Posted by Stiggy

Nope. Now the company is going to work to please the shareholders and make them money.

Can anyone say Ferrari SUV?

I hope they don't venture out with a sub 4-m compact SUV - 4m long and 4m wide

[deetjohn]

Knew something drastic was going to happen when Luca split with Fiat. http://www.team-bhp.com/forum/intern...olo-quits.html

Ferrari is the crown jewel in Fiat group. And this shows how bad shape Fiat must be globally. I think Fiat made a huge mistake by acquiring a stake in Chrysler in 2009. They have been working hard on its success ever since but its going to take some more time and a lot of money. And spinning Ferrari off is going to get them a lot of money.

But, the details are not very clear though. 10% of Ferrari is owned by Piero Ferrari and 90% is with Fiat Chrysler Automobiles. The news says 10% out of this 90% will be will be offered to public investors and the remainder will be distributed among FCA shareholders.

So, is Fiat giving off just 9% and the rest stays as is? Will there be a redistribution of shared within FCA? Who all are going to get a piece of Ferrari? What happens to Maserati and Alfa? What will happen to the F1 team? And Ferrari is cash rich and what will happen to the reserve? A lot of questions to be answered.

[CrAzY dRiVeR]

Originally Posted by deetjohn

Knew something drastic was going to happen when Luca split with Fiat. http://www.team-bhp.com/forum/intern...olo-quits.html

Ferrari is the crown jewel in Fiat group. And this shows how bad shape Fiat must be globally. I think Fiat made a huge mistake by acquiring a stake in Chrysler in 2009. They have been working hard on its success ever since but its going to take some more time and a lot of money. And spinning Ferrari off is going to get them a lot of money.

But, the details are not very clear though. 10% of Ferrari is owned by Piero Ferrari and 90% is with Fiat Chrysler Automobiles. The news says 10% out of this 90% will be will be offered to public investors and the remainder will be distributed among FCA shareholders.

So, is Fiat giving off just 9% and the rest stays as is? Will there be a redistribution of shared within FCA? Who all are going to get a piece of Ferrari? What happens to Maserati and Alfa? What will happen to the F1 team? And Ferrari is cash rich and what will happen to the reserve? A lot of questions to be answered.

Adding another question to this - Do they feel that the cash strapped Chrysler is worth much more than the prestigious and cash-rich Ferrari?

They seem to be letting go of a bird in hand to aim at a bird somewhere on top of the tree.

[scofield]

I think we should read the article in a proper business sense from recommended financial portals like FT,Reuters before making putting down our point of views and bullying the decision.

FCA is just trying to run two different companies - one is the bunch of all brands in FCA group and other is just Ferrari itself.

This is a proper way of going forward because the debts of the companies would be split across i.e $7 billion and $4 billion respectively. Moreover, they are just offering just 10% shares from FCA's kitty of 90% i.e 9% only to the markets rest is still owned by FCA shareholders and Ferrari family. This can be aimed in raising cash which can be a help in reducing debts and managing investments.

I would say this is a better way of running a brand like Ferrari, it should have different strategic point view and capital buckets to spend because to be at the top one has to continuously innovate and launch aspirational products for which the funding should be streamlined and easily available .

Moreover, I also see that FCA is not at the best of its financial health as they have lined up around $60 billion investments for products across all companies and they don't want Ferrari to suffer at any cost - VW itself is a cash rich company hence they have the headroom to handle their brands in house.

[srishiva]

I think this would give good amount of money for Fiat to go ahead with its plan. Right decision I would say.
Fiat should have taken over Suzuki (or merge) which would have been better. Just for the U.S market, it took on Chrysler. Hope they still do it.

[Autolock123]

Ferrari has been known for its Innovation & Exclusivity, but now with the pressure to deliver on Quarterly basis, i hope innovation doesn't takes a backseat and in a run to achieve/maintain the margins in excess of 15% (as stated in 2014-2018 plan) it continues to maintain its exclusivity.

[fiat_tarun]

They are not selling Ferrari, but spinning off Ferrari into a separate company. They are planning to list a 10 percent stake in Ferrari in the United States and Europe through a public offer.

Another 10% of Ferrari is owned by Piero Ferrari, vice chairman and son of the founder Enzo, who died in 1988. The remaining 80 percent stake held by Fiat Chrysler will be distributed to FCA shareholders, including Fiat's founding Agnelli family which controls 30 percent of FCA

Marchionne would remain Ferrari's chairman after the spin-off and reiterated that Ferrari sales, capped at around 7,000 vehicles a year, would only be raised significantly if there was sufficient demand from the super rich to not jeopardize the brand's exclusive status.

More details on this here

While it is not the wisest of decisions, this is the only way they can raise money to fund their mega plan - to boost sales by 60 percent to 7 million cars and raise net profit five-fold by 2018.

Actually Fiat buying out Chrysler has worked out perfectly for both. Chrysler has been seeing continuous growth ever since Fiat took control and has actually been saving the day for Fiat with Europe in the dumps. The American market is the second largest after China and one of the most profitable and Fiat by itself never stood a chance there. The only downside is the core Fiat brand is being ignored with hardly any investments in new models. Even their new plan talks more about Alfa & Maserati.

Chrysler also has about $12 billion in cash, but there are some debt agreements that Fiat should first full-fill to access that and for that they need cash now !

Buying Suzuki would not have helped them much, since Suzuki is no where in the US & China - the 2 biggest markets where Fiat had no presence. India is too small at the moment to influence such decisions.

[volkman10]

As stated in the above post, Fiat-Chrysler Not Selling Ferrari, Just Raising Cash to Pay Debt.

10 percent of Ferrari S.p.A. shares will be listed on stock exchanges in the United States and Europe.
That's how next year will bring in an estimated $2.5 billion to the group thanks to people who are are now offered the chance to freely buy and sell Ferrari shares.

The remaining stock will go to FCA's current investors.

This is crux of the whole deal.

Source: http://www.autoevolution.com/news/fi...ebt-88284.html

[batterylow]

Fiat Chrysler’s plan to spin off Ferrari as a separate business to fund future investment is on the starting grid after the latter formally filed for an initial public offering on the New York stock exchange.

The luxury carmaker is aiming to become a €10bn (£7bn) separate company, Ferrari NV, by early next year.

Source

Image is representative only

[mahesh_sn]

Ferrari is set to be valued at $9.82 billion after it set the price band at $48 to $52 for its upcoming IPO. It will trade under the ticker "RACE", what an apt symbol to have for such an iconic racing brand!!! The company is also looking to break its historical production cap of 7000 cars per annum and will look to raise it to 9000 by 2019 to reduce waiting period.
Few excerpts from the source

The IPO and eventual full spinoff of Ferrari are part of Fiat Chrysler Chief Executive Officer Sergio Marchionne’s effort to raise funding to cut the parent company’s debt and help finance a 48 billion-euro ($54.5 billion) investment program that focuses on expanding the Jeep, Alfa Romeo and Maserati nameplates globally.

Chairman Piero Ferrari, the son of the founder Enzo Ferrari, gets a cash payment of 280 million euros as part of the transaction. He will keep a 10 percent stake after the separation of Ferrari.

The Maranello, Italy-based manufacturer, which seeks to limit the number of vehicles it makes to slightly less than demand to maintain exclusivity, said in a filing last month that it plans to raise production to 9,000 vehicles by 2019. Ferrari will stick to producing high-end sports cars, and won’t follow rivals into models such as sport utility vehicles or electric autos, as powerful vehicles with traditional growling engines are part of what customers pay for, CEO Amedeo Felisa said in September.

[Tushar]

Ferrari NV made its debut on the trading floor on a positive note. Listed at an IPO price of $52 per share, the valuation went up to as much as $60.97 per share, generating around $893 million for parent Fiat Chrysler Automobiles (FCA) according to the Wall Street Journal. The shares closed at $55.

Link to Team-BHP news article