FIAT: Ferrari 2015 'spin off' via IPO

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FIAT: Ferrari 2015 'spin off' via IPO

Post by 00521 on Thu Oct 30, 2014 12:44 am

http://online.wsj.com/articles/fiat-chrysler-plans-ferrari-ipo-1414588494


MILAN— Fiat Chrysler Automobiles NV will spin off Ferrari through an initial public offering next year as Chief Executive Sergio Marchionne seeks to unlock the value of the sports-car brand and fund an ambitious five-year plan.

Plans for a Ferrari listing, an about face for Mr. Marchionne, come as the auto industry is facing new headwinds from troubles in emerging markets in Russia and Brazil, a Europe’s auto-sales recovery seems less certain, and profit in the U.S. and China is clouded by increasing friction with regulators.

Investors cheered the news. Fiat Chrysler shares were up 13% in Milan and rose 12% to $10.85 in afternoon trading in New York on Thursday.

A Ferrari spinoff could deliver as much as $1 billion in financing for Mr. Marchionne’s vision based on analysts’ estimates of the sports-car brand’s market value. The valuation ultimately could depend on whether investors see Ferrari more as a car manufacturer or a luxury company.

Fiat Chrysler owns 90% of Ferrari and the rest is held by the son of founder Enzo Ferrari. The 80% of Ferrari not included in the IPO, which is slated to be held by June, will be distributed to Fiat Chrysler shareholders.

The disclosure also comes six weeks after Luca Cordero di Montezemolo stepped down as chairman following 23 years at the car maker’s helm. According to people familiar with the matter, Mr. Montezemolo had opposed a Ferrari IPO.
And he was adamant at capping Ferrari’s yearly production at about 7,000 vehicles, while Mr. Marchionne has hinted that the figure could rise to 10,000.

Mr. Marchionne managed a herculean task of breathing new life into Chrysler following its bankruptcy in 2009, but now must achieve a more difficult feat: making the merged Fiat Chrysler better able to compete with rivals that sell many more vehicles and have greater economies of scale.

A key move in that direction was Fiat Chrysler’s presentation in May of its five-year plan, which called for total vehicle sales to rise to 7 million in 2018 from 4.4 million last year. In presenting that plan, Mr. Marchionne said Ferrari wasn’t for sale. He also said then that outside estimates put the value of Ferrari at about $5.5 billion—though he thought it was worth much more.

At the time, Mr. Marchionne said the auto maker would spend €48 billion ($60.7 billion) on research, development and capital expenditures for new models. He laid out plans to use cash from operations to finance the overhaul, and said he might also issue debt.

On Wednesday, he did just that, disclosing a $2.5 billion convertible bond and plans for Fiat Chrysler to sell about 100 million of its own shares, worth about $1.1 billion at current share prices. Those funds along with proceeds from the Ferrari IPO provide a firm basis for the overhaul and bolster its finances in event of a global market downturn. Fiat has one of the largest debt loads relative to its size in the car industry.



http://www.carbuzz.com/news/2014/10/29/Official-Report-Fiat-Chrysler-Reveals-Plans-to-Sell-Ferrari-7723372/


Italian supercar maker will be spun off in 2015.

Fiat Chrysler Automobiles (FCA) has just issued a press release announcing its plans to spin off Ferrari in 2015.

As part of “a capital plan appropriate to support the Group’s long-term success,” ten percent of Ferrari will be publicly offered on US and European stock exchanges, with the remainder going to FCA stockholders.

Company 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 we pursue separate paths for FCA and Ferrari."

The share sale will help fund FCA’s $61 billion growth plan in creating future products.

FCA Chairman, John Elkann, said: “the separation of Ferrari will preserve the cherished Italian heritage and unique position of the Ferrari business and allow FCA shareholders to continue to benefit from the substantial value inherent in this business."

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

Recently departed former CEO Luca Cordero di Montezemelo ran Ferrari since 1991.  Upon severing his tenure with the carmaker, di Montezemelo declared it “an end of an era,” with Marchionne taking over as Ferrari’s CEO.



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Re: FIAT: Ferrari 2015 'spin off' via IPO

Post by Gary on Thu Oct 30, 2014 4:43 am

good luck with that

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Re: FIAT: Ferrari 2015 'spin off' via IPO

Post by RaySinKa on Thu Oct 30, 2014 9:18 am

A nearly 50% production increase, they will need to work hard to maintain production quality and exclusivity will diminish a little. However they will no have to answer to corporate shareholders who, in tight financial times on the future may not see the benefits of a F1 team as an asset on the Balance Sheet Sad

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Re: FIAT: Ferrari 2015 'spin off' via IPO

Post by 00521 on Thu Oct 30, 2014 7:48 pm

Marchionne is ultimately a bean counter.

Unfortunately, in the automotive business... Bean Counters often kill the one Goose that lays the Golden Egg.

Without Ferrari, FIAT has no REAL modern standard of true excellence.

On paper, FIAT's plan is straightforward and logical, but in reality, it must be as convoluted just as it is thoroughly illogical.

The HERITAGE of F-1 racing excellence of Ferrari shall be financially jeopardized and with that the sales point of FIAT's ONE division that consistently performs to the highest level imaginable in the modern automotive world.

"If it ain't broken, don't fix it'.

Ferrari is hardly broken, while FIAT has been broken for decades. A better approach would be to gradually bring FIAT up to Ferrari's standards, not the other way around, only then would FIAT really work, but at FIAT, Land of the totally blind, the one eyed Marchionne is king, so he will now pluck one of Maranello's good eyes to replace his own.

Remember, a decade ago, the same "FIAT men" could have acquired INTACT (the now defunct, but then cash rich) Gruppo Bertone for a mere song... but completely blew that one, so now they have only Bertone's old factory, but none of its former 100 years of design excellence and none of its possible contracts.

Now, are going to jettison Ferrari off for an IPO to deliver cash to FIAT, and probably water down the Ferrari brand of excellence by increasing output... by nearly 50%?

All that for a paltry few Billion cash infusion to FIAT, so that they can reorganize FIAT-Chrysler? That's akin to the Catholic Church stripping the Vatican to pay off the banks.

Marchionne may be remembered by history as THE misguided exec who finally diluted Ferrari thoroughly and then slowly killed off the Ferrari brand.

Luca di Montezemolo was right to leave under stormy protest.

(Thanks for warning us, the aficionados...)

Kudos, Luca.



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Re: FIAT: Ferrari 2015 'spin off' via IPO

Post by Schumacat on Mon Nov 03, 2014 11:27 am

If I understand correctly, they are only selling off 10% of Ferrari, so Ferrari will still be under FIAT stockholder's control. And the money from the sale will help FIAT's growth. I don't think this is a bad move.
Marchionne might be a bean counter, but we have to remember that he is the guy who rebuilt the Chrysler brand and made it profitable again.

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Re: FIAT: Ferrari 2015 'spin off' via IPO

Post by 00521 on Mon Nov 03, 2014 3:06 pm

Schumacat wrote:If I understand correctly, they are only selling off 10% of Ferrari, so Ferrari will still be under FIAT stockholder's control. And the money from the sale will help FIAT's growth. I don't think this is a bad move.
Marchionne might be a bean counter, but we have to remember that he is the guy who rebuilt the Chrysler brand and made it profitable again.

Yes, That is absolutely correct.

10% is just that only... 10%

However, in the world of the ruthless... that 10% opens up the Scuderia to the vicissitudes of a vicious market cycle... as well as the likes of the Carl Icahn types of the world.

As far as saving Chrysler... he was a pivotal player in the midst of the UAW Pension Fund / US Government bailout... as... that is where the cash REALLY came from.

He was the only one who stepped forward and took the risk, which was great, but NOT excessive. Remember, Chrysler was no sicker than (perpetually ill) FIAT in 2008... In the Loooong view, Chrysler's acquisition was due to the fact that FIAT just wanted back its decades lost US Market, and when they suck up the technology (and cash), FIAT may drop Chrysler, just as Daimler / Mercedes did. (LOL)

Anyway... Lets hope for the BEST!

I think about Il Commendatore each and every day... a GREAT man, and a hard man to fool.


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