Fiat Chrysler spin out Ferrari

[trashbat]

Off it goes on its own. 10% for sale to the general public, 90% to FCA shareholders (hiya)

http://www.streetinsider.com/Corporate+News/UPDATE...

I wonder if that has anything to do with di Montezemolo's exit.

[suffolk009]

Just seen it on the FT: http://www.ft.com/fastft/227932/fiat-chrysler-spin...

I have absolutely no industry knowledge, but it seems the new man is a stoney eyed corporate guy and not so prone to the romanticism of the prancing horse.

I read somewhere that Ferrari has a sizeable pile of dosh in bank, so is Marcionne selling of the family silver to help balance the books, cutting free of a troublesome child, or just concentrating on getting everyone who can drive into a Fiat 500. I dunnow.

ETA: Joe Sayward writes:

The new Fiat Chrysler Automobiles has announced plans to list Ferrari on US and European stock exchanges. FCA owns 90 percent of the Ferrari shares (the other 10 percent belonging to the Ferrari family) and the plan is for 10 percent to be floated and the remaining 80 percent to be given to FCA shareholders. The result of the announcement was a leap in the value of FCA shares, which was obviously what it was designed to do. FCA needs to build up its value in order to attract more financing to help the company. It is doubtful that FCA will lose ultimate control of Ferrari as a result as Exor SpA, the holding company of the Agnelli family, still owns 30% of the company parent company.

Edited by suffolk009 on Wednesday 29th October 14:58

[trashbat]

suffolk009 said:

Just seen it on the FT: http://www.ft.com/fastft/227932/fiat-chrysler-spin...

I have absolutely no industry knowledge, but it seems the new man is a stoney eyed corporate guy and not so prone to the romanticism of the prancing horse.

I read somewhere that Ferrari has a sizeable pile of dosh in bank, so is Marcionne selling of the family silver to help balance the books, cutting free of a troublesome child, or just concentrating on getting everyone who can drive into a Fiat 500. I dunnow.

I can tell you plenty about the FCA plan should you desire, as I've been following it for a while.

Marchionne (new head of Ferrari, but long time head of Fiat, now Fiat Chrysler) is historically an accountant, but it doesn't mean he's unsympathetic to the petrolhead side of things. I'm listening to a conference call now and he describes the move as being prompted by Ferrari's niche nature having little direct commonality with a mass production automotive manufacturer.

The big Fiat Chrysler plan is to increase volume, in the cheap sector but particularly in the premium segment. This means more volume for Maserati, already begun, and much more volume for Alfa, yet to really happen. That all needs product investment and so the divestment of Ferrari will at least raise a bit of that cash.

He's said a couple of other things of interest: that Ferrari depends on exclusivity through low volume and it would be self-defeating to try and increase that significantly, which people have been afraid he might do for a while. He also said something like "cars are almost incidental to Ferrari", and how it's a luxury brand above all else. I'm not sure that'll be taken as it was meant!

I've said it before: for a long time, from a shareholder PoV and especially in terms of financial results, Ferrari has been an oddball 'and in other news' item, a bit like their interests in say Magneti Marelli or the other incidentals. That tells you a few things: it can survive on its own, and it already has autonomy. I would tentatively say then that independent Ferrari is a good thing for prancing horse fans, affording even more freedom, but it's also probably not actually that much different from today.

Edited by trashbat on Wednesday 29th October 15:06

[craig_m67]

I wonder what this means for the Alfa revival "skunk" team led by Ferrari. They should have spun them off together, it's how they started afterall.

[trashbat]

craig_m67 said:

I wonder what this means for the Alfa revival "skunk" team led by Ferrari. They should have spun them off together, it's how they started afterall.

By the time it happens in 2015, we ought to have progressed with some Alfa stuff like the Giulia. Whatever happens, there still has to be a working relationship between the two, since there are strong Ferrari/Maserati links today. It should also mean a load of cash for the Alfa project.

[ChemicalChaos]

They should have sold Alfa Romeo too - whilst Alfa is owned by Fiat, it will be forever knobbled from properly competing in the small and medium sized car sectors

[trashbat]

ChemicalChaos said:

They should have sold Alfa Romeo too - whilst Alfa is owned by Fiat, it will be forever knobbled from properly competing in the small and medium sized car sectors

I disagree quite strongly, and I hope the next 12 months will start to show why.

[matrignano]

Would this explain Montezemolo's departure?

[trashbat]

matrignano said:

Would this explain Montezemolo's departure?

I don't know that it makes it any clearer.

When LdM was ousted, I expected the opposite: that Ferrari would be imminently reorganised in terms of management so that it stopped operating as a weird little rich child off doing its own thing and be brought back into the fold a bit.

I can't imagine LdM would have turned down running his own independent Ferrari empire, and there's no way this deal happened so quickly that his departure is unconnected. His relationship with Marchionne had become fractured, which can't have boded well for him, but maybe there's more to it - maybe the board (who after all had to approve this) decided he wasn't the man to oversee the separation, and maybe just didn't want to give him that much control over a risky project.

I'm sure it'll all come out eventually.

[Pistachio]

Hmmm
some open thoughts
So will FCA:-
1. bring back Lancia to fill spot left by Alfa Romeo as it goes more upmarket maybe??
2. push Maserati up to Bentley/Rolls Royce territory
3. Make Alfa more Porsche/Ferrari territory
4. Give FIAT a kick up the A**se to create cool cars again
5. Ferrari float will bring quite a bit of cash into the business to improve stuff and develop new models.

or non of the above ????

[ging84]

none of the above

i suspect there are far more complex business side of things going on, which will involve a few people making a lot of money, a lot of investors making fk all and within 10 years ending up with a smouldering ruin of a company which will then be bought back for nothing and rebuilt within 5 years

[bqf]

I've been watching Fiat shares for a while and they have been in the doldrums (20% down over the past few months) on the basis that Marchionne's plans weren't clear.

The share price leap would seem to be a reaction to plans becoming clearer, although I suspect he needs to do something quickly with Alfa or everyone will lose interest, again.

The Ferrari shares will undoubtedly trade for a massive premium, purely because of the aspirational nature of the products (mostly aftershave and other crap these days!).

People have short memories though - Ferrari was totally fked at the end of the Enzo era and it's only recently that it's found it's mojo, backed with the significant capital of Fiat. It could go the way of Aston Martin if it's not careful, especially with the huge investment in the F1 team, or it could end up bankrolled by Middle East sovereign wealth funds, and become their little plaything.....

Hmmm. Not sure whether this is good or bad really.

[trashbat]

Pistachio said:

Hmmm
some open thoughts
So will FCA:-
1. bring back Lancia to fill spot left by Alfa Romeo as it goes more upmarket maybe??

No. Lancia is probably dead, and if it's not, nothing will come of it for a long while, at least until Alfa is sorted.

Pistachio said:

2. push Maserati up to Bentley/Rolls Royce territory

The plan for Maser is fairly clear. Much more volume, and down the ladder slightly - which is why we have a diesel Ghibli. Think what Porsche has done, I suppose.

Pistachio said:

3. Make Alfa more Porsche/Ferrari territory

The plan is to make Alfa like the bulk of what BMW do, and stop at about the overlap point with Maserati. In BMW terms, maybe Alfa stops at the 550i or thereabouts, and Maserati starts at the M5, but there may be more overlap than that. Remains to be seen.

Pistachio said:

4. Give FIAT a kick up the A**se to create cool cars again

The plan hinges around polarisation of the market into cheap & luxury, i.e. no mid-price family cars any more, because apparently everyone is either buying Dacias or high spec Audis. Therefore the Panda fits into budget territory, the 500 is possibly premium, and everything else they used to do is toast. Not sure what will fit the gap in terms of Fiat brand.

Pistachio said:

5. Ferrari float will bring quite a bit of cash into the business to improve stuff and develop new models.

There's already a lot of cash going into this, but it'll help, and help avoid more industrial debt.

[trashbat]

bqf said:

I've been watching Fiat shares for a while and they have been in the doldrums (20% down over the past few months) on the basis that Marchionne's plans weren't clear.

They've also doubled in the last couple of years