FCA to spin off Ferrari
Fiat Chrysler Automobiles is planning to spin off Ferrari and list the shares as part of a bigger scheme, which includes a US$2.5 billion convertible bond issue to help fund its business plan. The newly created FCA, which moved its primary share listing to New York earlier this month, wants to invest 48 billion euros over the next five years to turn Jeep, Maserati and Alfa Romeo into global brands – and rival Volkswagen and BMW by strengthening its position in the premium car market. As part of measures announced on October 29, FCA will also sell up to 100 million of its shares by the end of 2014 – including treasury shares and stock to be issued to offset a share buy-back from Fiat investors, who opposed the recent merger into FCA, and repay some Chrysler bonds to remove restrictions on access to the US company’s cash, whose buy-out it completed earlier this year. FCA’s chief executive, Sergio Marchionne, says the measures will inject four billion euros into the company and help it deal with any eventual dip in sale volumes. “It gives us all the comfort to go and execute the plan up to 2018.” Under the plan, FCA will list a 10 per cent stake in Ferrari in the US and possibly in Europe through a public offer, hoping to complete the spin-off next year. The remaining 80 per cent held by Fiat Chrysler will be distributed to FCA shareholders, including Fiat’s founding Agnelli family which controls 30 per cent of FCA. The other 10 per cent of Ferrari is owned by its vice-chairman, Piero Ferrari. FCA plans to complete the sale of the US$2.5b bond, which later converts into FCA shares, by the end of this year. “It’s expected investors participating in the offering, subject to completion of Ferrari’s spin-off, will be entitled to participate and receive shares of Ferrari pursuant to provisions adjusting conversion terms,” says FCA. Marchionne says he will remain as Ferrari’s chairman after the spin-off and reiterates the prancing horse’s sales, capped at about 7,000 units a year, will only be raised significantly if there is sufficient demand from the super-rich to not jeopardise the brand’s exclusive status.
