Fiat to Spin off Ferrari

The markets seem to like this. Fiat is reported to be up 15% . Everyone wants more Ferrari shares it seems.

 

I'd buy ONE share and take delivery.

Then frame it and put it on my "I Love Me" Wall, at work.

 

Sad day
Not to be facetious, but IMO nothing good has ever come from Chrysler. Hmmm, Chrysler-Daimler merger 2Billion dollar loss, Chrysler by maserati....etc,...the list of failures goes on and on. Currently reading Bob Lutz's new book, "Idiots and Icons, Straight Talk on Leadership" and let me tell you, it's an eye opener and absolutely amazing what went on at Chrysler. Give it a read.

 

Forza Minardi! My favorite all-time F1 team!

 

I think you have to bear in mind that the Ferrari brand is the most recognized and respected brand in the history of the world. It deserves a market multiple that exceeds that of a car maker. (How many times have I told my kids--It's not a car, it's a Ferrari?)

By breaking off a small portion and allowing it to trade on its own, you allow the market to demonstrate that multiple.

Now for some crazy talk. What if the real buyer is NOT from automotive, but from a luxury/design brand house? LVMH? Ferrari would be a very interesting add to their mix. Or how about Apple? They are struggling with a very low multiple that values them as a tech company when they are really more of a lifestyle/luxury brand.

Anyway--all daydreaming. The reality is probably that this is one more chapter in the soap opera that is Italian corporate marriage and divorce. Guzzi and Ducati have each had more owners than I can count. Why not Ferrari too?

 

+ 1

I miss Luca

Damn the bean counters, but love the irony of Ferrari v Alfa

Enzo is probably rolling over right now

 

Buy a bunch, frame them, then sell them to stock certificate collectors when the company goes bust and you will make a profit.

A sad day for Ferrari IMO. I miss Luca at the helm.

 

BUY !
Everyone who wants a FERRARI will.
In the long run price will soar !!!!

 

This should be an interesting IPO, but as an independent company, there might be more pressure to trim racing budgets.

 

True, but its only 10% that will be public, Fiat won't get any credit for the success that will come etc. Let's say Ferrari will be a distant part of the FCA family. And who's to say that in a few years time, FCA will repurchase the 10% from the other shareholders.

 

Ferrari SUV's and a Ferrari "Panamera" are sure to follow for sales reasons. Or we will see like what Lotus did, making a "tuned by" badge. I had an Isuzu Impulse with a "tuned by lotus" badge on it and it handled like a drunken hog on ice.

[ame]http://www.youtube.com/watch?v=QL3Rj9IT4Mc[/ame]


and that is the end of my chaos theory. discuss

 

Seriously VW want to buy Ferrari?

 

From the perspective of Ferrari owners, the issuance of 10% of the shares is essentially meaningless. This was simply done to set a market price for the 90% of shares to be spun off to the shareholders.

The REAL ISSUE is the issuance of $2.5 billion of convertible bonds, the proceeds of which will go to Fiat. Unless and until those bonds convert, Ferrari's cash flow is largely going to be dedicated to paying the interest on those bonds instead of developing its street cars and its racing program.

 

Guys- pay attention to Ski Bum. He is 100% on the money here.

Its what I've feared all along. I think SM thinks he's building another VW. There they have strong mainstream and luxury brands which sell in large volumes that can sustain some very high end boutique brands. With FIAT it seems its the opposite. The mainstream and luxury brands cannot really make their sales goals and thus its for the boutique brand to carry the burden. This does not end well...

 

So you and others are afraid about potential growth of production numbers or there is some other reason?

 

Worst thing Fiat ever did was get involved with Chrysler and NY banking establishments.

 

I think you can read it that way too. Its not how I read it. I read it as a way to accelerate future income to today in order to stabilize the debt load they took on to acquire Chrysler. I don't really believe their growth strategy will work- so I see it as crashing down.

I wouldn't say I am afraid of growth. Usually growth in business is a good way to achieve a goal, but I am dubious of how they want to get there.

If it works, I will be happy to be wrong.

 

I am not sure that this only involves 10%. Once it's publicly traded, it becomes far simpler for the main shareholders to change their ownership positions. Just crossing my fingers that none of them need additional funds or portfolio diversification in the next while.

 

What wrong happened to Ferrari after they are in relationship with Chrysler? (of course besides no successes in F1)

 

And they probably would have gone bankrupt without the infusion of Chrysler's cash......but that's a minor detail I guess

 

Source:
Why is Fiat Chrysler selling Ferrari? An analyst weighs in - Road & Track

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This morning’s announcement that Fiat Chrysler will spin off Ferrari into a separate company rocked the automotive world. Coming hot on the heels of the fiery resignation of longtime Ferrari CEO Luca Cordero di Montezemolo, the Italian-American auto conglomerate’s decision to shed Ferrari seems particularly chaotic. We spoke with Dave Sullivan, an analyst at AutoPacific, to get some insider insight on the deal.

“In Q2 of this year, Ferrari contributed 729 million Euros (roughly $928 million) of revenue, with earnings before interest and tax of 105 million Euros (about $133 million),” Sullivan told us via email. “Not bad for 1900 sales.”

“Ferrari is no doubt, the crown jewel of the Agnelli empire [the founding family behind Fiat]. Ferrari is not just a vehicle manufacturer. It's also a brand. You can buy clothes, luggage, etc. It's the pinnacle of F1. It's now up for debate what the value is of FCA with the most valuable piece of it being spun off,” Sullivan told us.

“But if you need to raise capital to fund the overhaul of Alfa Romeo and you're dead serious about it, this is what makes the most sense. Tesla stock is no joke and I am pretty sure Fiat Chrysler would love to get in on that type of success.”

In today’s press release announcing the sale, FCA CEO Sergio Marchionne said that pursuing a separate path for Ferrari was necessary “to secure the 2014-2018 Business Plan and work toward maximizing the value of our businesses to our shareholders.” Sullivan tells us that, in light of Marchionne’s assertion that he didn’t need to borrow any money for this business plan, selling off Ferrari was perhaps FCA’s only option.

“This really didn’t come as a surprise to me,” he told us.

As for the alleged pressure to ramp up production, which sources cited as the reason Montezemolo left Ferrari in a huff this month? “I imagine that was all a nice fable,” Sullivan says. “I would bet that he was told the company would be spun off and he wanted no part of it.”

It’s not just a big change for Fiat Chrysler: Sullivan points out that Ferrari has been run with full autonomy, despite being owned by Fiat since 1969.

“It does make me wonder who will run the company a year from now,” he said. “Increasing capacity at Ferrari is not going to be easy or cheap. Also, having shareholders barking at management will be a change.” Fiat Chrysler’s plan is to offer 10 percent of Ferrari shares on the U.S. and/or European markets, dispersing the rest to current FCA shareholders.

It’s not the first time Ferrari’s undergone big changes. Montezemolo, who was appointed as president of Ferrari in 1991 in the company’s dark days after founder Enzo Ferrari’s death in 1988, helped make the road car division profitable despite insisting on limiting production to 7000 cars a year. He also headed up the company as it went from a small, insular factory in Maranello to a worldwide luxury brand with, among other things, “the world’s largest indoor theme park,” Ferrari’s amusement complex in Abu Dhabi.

Come next year, you’ll be able to add a Ferrari-branded stock certificate to your collection of Ferrari-branded hats, shirts, jackets, gloves, bags, keychains, cologne, laptops, and more.

Fiat Chrysler Automotive stocks surged 18% on Wednesday after the announcement.

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My only fear:

GM has purchased 51% ownership of Ferrari this morning as reported by Reuters. The company will be infusing its highly competent and innovative management consultants in the upcoming months with Ferrari. It expects signifcant cost savings in mating its 1XD platform, a high speed minivan otherwise known as the "Traveller XL", with Ferraris top of the line 12 cylinder engine. "We expect to quadruple the profits, lower the price below $50,000.. and preserve the look and feel of the cars by using synthetic leather, aluminum and carbon fiber" said Minestrone.

 

What will become of spare part prices?

 

Not the first time Mr. Soup would have crashed Ferrari: Ferrari 599 GTB crashed in Switzerland