Fiat Chrysler Automobiles To Spin Off Ferrari, Sell Shares In The Company

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Ferrari F60 America launch, Beverly Hills, California

Ferrari F60 America launch, Beverly Hills, California

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Fiat Chrysler Automobiles [NYSE: FCAU] finally ended speculation that it plans to spin off Ferrari by announcing today that it will in fact make the famous sports car brand and racing team a separate unit. The automaker will also via Ferrari issue $2.5 billion in convertible bonds to help fund its expansion plans.

As for the spin off, FCA said it would list a 10 percent stake in Ferrari on major stock exchanges in the U.S. and possibly Europe, most likely the New York Stock Exchange and another exchange in Milan, with the remaining 90 percent to be distributed among FCA’s existing shareholders, the biggest of which remains the Agnelli family which controls FCA. FCA itself was only listed on the share market a few weeks ago.

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“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,” FCA CEO and Ferrari chairman Sergio Marchionne said in a statement.

The separation is expected to be completed next year, bringing to an end Fiat’s 45-year ownership of Ferrari. However, it means FCA will soon have a sizable stake in a company potentially worth billions, which it could later tap into to help fund other areas of its business, such as the 2014-2018 plan which is estimated to require around $60 billion.

The news comes a little over a month since the resignation of Luca di Montezemolo. The long-serving Ferrari chairman was staunchly against taking Ferrari public and perhaps hinted at the possibility of today's news in his parting words, “Ferrari will have an important role to play within the FCA Group in the upcoming flotation on Wall Street—this will open up a new and different phase which I feel should be spearheaded by the CEO of the group [Marchionne].”

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