Fiat buys back Ferrari?

Italian giant wants its toys back

By PH Staff / Tuesday, 30 May 2006 / Loading comments

Big Fiat

With money in the bank again, Fiat has decided to buy back its stake in Ferrari.

Back in 2002, the troubled Italian car giant sold off 34 per cent of its stake in its iconic Modena-based arm with the aim of reducing its €6 billion (£4.1 billion) debt. In its first quarter, it lost €429 million (£294 million) but recouped €775 million (£531 million) via the sale, to Mediobanca.

Fiat looks set to make a profit this year, maybe up to €200 million (£137 million), and wants that Ferrari halo back. Fiat boss Sergio Marchionne reckoned last week that 29 per cent of Ferrari shares would be bought back within the next month, and has opened negotiations with Mediobanca.

Fiat has an option to acquire Mediobanca's Ferrari holding for around €800 million (£550 million). It also owns a two per cent stake in Mediobanca, currently worth around €200 million (£137 million).

The buy-back would give Fiat 85 per cent of the company, with a company in Abu Dhabi holding five per cent and a member of the Ferrari family holding 10 per cent.