Not long ago, Fiat Chrysler Automobiles announced a plan to spin off Ferrari, and part of that plan was to sell ten percent of the iconic automaker via a stock sale. This week, that phase drew closer with FCA having filed for an initial public offering on the New York Stock Exchange.
In the formal documents with the U.S. Securities and Exchange Commission, it was not specified how many shares the company planned to sell or the expected price, disclosing only that it would not list more than ten percent of the business. Piero Ferrari, the son of founder Enzo Ferrari, owns the ten percent and plans to retain it. The remaining 80 percent stake would be distributed among FCA’s own investors.
The IPO is expected after mid-October and is targeted to be completed in early 2016.
The stock sale is part of Fiat Chrysler CEO Sergio Marchionne’s strategy to raise about $5 billion to cut debt and help fund a more than $53 billion investment program focused on expanding the Jeep, Alfa Romeo and Maserati brands worldwide.
Marchionne has said that he believes Ferrari is worth “at least” $11 billion, which would represent more than half of FCA’s market value. Outside valuations are more conservative, ranging between $5.5 and $11 billion. Marchionne expects investors to view Ferrari as not as an ordinary automaker, but as a luxury-goods brand, such as Prada. Companies of that sort trade at prices about twice the valuation of auto manufacturers.
Marchionne’s viewpoint may match that of the general public, but will it match that of brokers and investors?
The spinoff of Ferrari and the investment in the other brands is not the likely end-game. Industry analysts have said that the spinoff of Ferrari should give a more clear valuation of Fiat Chrysler and make it easier to prepare for a merger. Earlier this year Marchionne sent an e-mail General Motors proposing a merger, an inquiry that received a cool reception. But Marchionne has continued to talk about mergers and alliances, so clearly there is more to come.
Image selected from RanjithMN via Creative Commons.
