Fiat Chrysler Automobiles (FCA) has announced the board's intention to spin Ferrari off into a separate entity in an effort to boost the group's revenue. The Italian-American automotive conglomerate – which listed on the New York Stock Exchange (NYSE) earlier in the month – is seeking to shore up its capital and valuation as it plans to expand greatly over the next five years.
The move will see FCA split itself from its stake of Ferrari, of which it owns 90% (Piero Ferrari, Enzo's son and Ferrari vice chairman, owns the other 10%). Once completed, 10% of the group's shares in the Italian supercar maker will be publicly listed in the United States and potentially in Europe as well, while the remainder will be distributed to FCA's shareholders.
FCA also intends to issue US$2.5 billion (RM8.1 billion) worth of mandatory convertible bonds – which have to be converted to FCA shares at maturity – and will be offering investors of the bonds subscription rights for the Ferrari shares that will be listed.
Such a manoeuvre should ensure that Ferrari maintains a level of autonomy separate from the rapidly-changing FCA while still remaining under the group's stewardship. FCA held a strong stance with regards to its ownership of Ferrari during the presentation of its five-year plan earlier in the year, saying that "Ferrari is not for sale".
According to Milanese investors, Ferrari could have an equity value of between €5 billion to €5.8 billion (RM20.8 billion to RM24.2 billion). Share prices of FCA listed in Milan shot up by over 18% to €9.03 (RM37.70) – their highest since April 23 – on the back of the announcement.
"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" said FCA chairman John Elkann.
Former Ferrari chairman Luca di Montezemolo has long opposed the public trading of the company
"As we move forward to secure the 2014-2018 Business Plan and work toward maximising the value of our businesses to our shareholders, it is proper that we pursue separate paths for FCA and Ferrari," added FCA CEO and Ferrari chairman Sergio Marchionne.
This is, of course, not the first time a Ferrari IPO has been mooted, as Marchionne has floated this idea for a number of years now. Former Ferrari chairman Luca di Montezemolo was constantly opposed to it, insisting that the company was not going to be publicly traded; now that the shrewd head honcho has resigned, however, it seems Marchionne is free to set his grand plans into motion.
So, if you've wanted to own a Ferrari but cannot afford one, how about owning a share in Ferrari instead?
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