Ferrari (Fiat) involvement with Maserati | FerrariChat
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Ferrari (Fiat) involvement with Maserati

Discussion in 'Ferrari Discussion (not model specific)' started by finnerty, Dec 26, 2006.

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  1. finnerty

    finnerty F1 World Champ

    May 18, 2004
    10,406
    #1 finnerty, Dec 26, 2006
    I'm sure many here are far more savy than myself when it comes to the world of "high finance"...

    So, can someone explain to me why Ferrari (Fiat) took over Maserati, but then dumped them so quickly? Perhaps, it wasn't profitable enough? --- so were they simply cutting their loss early? If they did want the loss, seems like they could have depreciated it more if they stayed in it longer? Was it more of a political venture? Or, were there some hidden financial games being played which made sense to the entities involved?

    ...just curious...
     
  2. 410SA

    410SA F1 Veteran

    Nov 2, 2003
    8,511
    West Coast
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    #2 410SA, Dec 26, 2006
    Here is my take on it. (I am a Fiat shareholder, so I have some interest in the outcome of all this.)

    Ferrari is currently 85% owned by the Fiat Holding Co, Fiat Spa. This is different from the other auto businesses of Fiat, which are held in Fiat Auto Spa., a subsidiary of Fiat Spa.

    Maserati was originally sold to Ferrari from Fiat Spa. in order to make Ferrari big enough to justify a fairly significant IPO. The IPO was designed to alleviate in large part some of Fiat Spa.'s debt burden and to give an exit strategy to Mediobanca, who at the time held a significant Ferrari Stake (around 38%).

    Fiat Spa. had a deal with GM that allowed them to essentially force a sale of Fiat Auto to GM. GM was in dire straits and the idea of having to buy Fiat scared them, so they entered into a buyout of that contract for around $2 billion. This money changed everything and allowed Fiat Spa. to shed some debt, pay off Mediobanca and reclaim the Ferrari shares and therefore change their Ferrari strategy.

    Fiat Auto, now full of GM's cash could afford to develop the Alfa Romeo Brand, along with Maserari, and allow Ferrari to free itself of Maserati, which was struggling to establish itself in Ferrari dealerships.
    This strategy also freed up Maserati's brand new factory for future expansion of Ferrari, with the Dino line perhaps and still bring Ferrari, on its own, to the critical mass necessary to go public.
     
  3. hg

    hg Formula Junior

    Dec 26, 2005
    425
    #3 hg, Dec 26, 2006
     
  4. finnerty

    finnerty F1 World Champ

    May 18, 2004
    10,406
    #4 finnerty, Dec 26, 2006
    Ahhh...the old 'shell' game ---- makes a lot of sense. Sounds a bit unethical, but legal (at least here in the States, so it must be more so in Italy). Besides, business is business...

    Good strategy on the part of Fiat / Ferrari --- further advance Ferrari's business cache, dangle an IPO possibility to stir up interest in the financial community, rid Fiat of some debt to chase off any would-be raiders, and free themselves from the clutches of GM's leverage and their option to grab a stake in the company.

    Brilliant! And, also they get to screw-over GM in the process! I have no great love for the plight of the American auto manufacturers.

    Given the history of the interplay between Ferrari and Ford back in the 60's or 70's (I don't recall exactly when that happened) ---- I would guess that Enzo himself would smile at this recent maneuver!!!
     

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