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Fiat spins off Ferrari, now you could own a piece of it

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Fiat spins off Ferrari, now you could own a piece of it
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After nearly half a century under Fiat, Ferrari has been spun off from its parent company.

Exhibit of Ferrari
Ferrari F138 cockpit detail
Luca di Montezemolo, Ferrari CEO
Ferrari fans in the grandstand
Ferrari F138 sidepod detail
The Ferrari logo
Ferrari museum
Luca Cordero di Montezemolo (ITA) Ferrari Ceo, Amedeo Felisa (ITA) Ferrari director, John Elkann (ITA) Fiat president and Sergio Marchionne (ITA) Fiat Chrysler Group Ceo with the new Ferrari 458 Speciale A
Sergio Marchionne, Ceo Fiat/Chrysler
Luca Cordero di Montezemolo (ITA) Ferrari CEO and the new Ferrari 458 Speciale Aperta

Shares in Fiat Chrysler rose to a six-month high today after the company announced plans to spin off Ferrari, an iconic marque that they've owned for 45 years. 10% of Ferrari's shares will be up for grabs, while the remaining 90% will be distributed between FCA's shareholders. 

Fiat revealed that investors participating in the $2.5 billion dollar mandatory convertible bond issuance will be entitled to participate and receive shares of Ferrari.

This decision will help to boost Fiat's valuation. The following is the official release from FCA...

The Board of Directors of Fiat Chrysler Automobiles N.V. (NYSE: FCAU) ('FCA') announced that in connection with FCA’s implementation of a capital plan appropriate to support the Group’s long-term success, it has authorized the separation of Ferrari S.p.A. ('Ferrari') from FCA. The separation will be effected through a public offering of FCA’s interest in Ferrari equal to 10% of Ferrari’s outstanding shares and a distribution of FCA’s remaining Ferrari shares to FCA shareholders.

The Board supports management’s determination that this transaction represents FCA’s best course of action to support the long term success of the Group.

FCA CEO Sergio Marchionne

The Board authorized FCA management to take the steps necessary to complete these transactions during 2015. FCA expects that the Ferrari shares will be listed in the United States and possibly a European exchange.

“I am delighted to have taken this additional step in the development of FCA," said John Elkann, Chairman of FCA. Coupled with the recent listing of FCA shares on the NYSE, the separation of Ferrari will preserve the cherished Italian heritage and unique position of the Ferrari business and allow FCA shareholders to continue to benefit from the substantial value inherent in this business.

Sergio Marchionne comments

FCA CEO Sergio Marchionne added, “Following our acquisition of the minority interest in Chrysler earlier this year, the transformation of Fiat and Chrysler into FCA was completed earlier this month with our debut on the New York Stock Exchange. As we move forward to secure the 2014-2018 Business Plan and work toward maximizing the value of our businesses to our shareholders, it is proper that we pursue separate paths for FCA and Ferrari.”

Marchionne continued, “The Board supports management’s determination that this transaction represents FCA’s best course of action to support the long term success of the Group while at the same time substantially strengthening FCA’s capital base.”

The spin-off of Ferrari will be subject to customary regulatory approvals, tax and legal considerations, final approval of the transaction structure from the FCA Board of Directors and other customary requirements.

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Series Automotive
Author Nick DeGroot