As part of a deleveraging plan to reduce debt in Fiat-Chrysler, Sergio Marchionne hatched a plan some while back to sell off Ferrari. This started to become reality in October when 10% of the company was listed on the New York Stock Exchange raising $893m for FCA. The share price initially soared from $52 to $60 as investors rushed to claim a piece of one of the world’s most famous racing marques.
FCA now plan to invest significantly in their remaining luxury brands, Alfa Romeo and Maserati, where higher margin returns are more achievable than from the FIAT/Chrysler brands. Sergio Marchionne has already stated he believes there should be an early return to motor racing for the Alfa Romeo brand.
The Ferrari selloff moved towards its completion today as a further 57% of the shares were listed on the Milan stock exchange. However, the early price rises in Ferrari’s ticker ‘RACE’ in New York have not only been reversed but seen the share price today fall to around 10% below its October floatation price. The shares were even briefly suspended at one point during this morning’s trading.
The valuation Marchionne placed on Ferrari at $52 a share is believed by a number of analysts to be way too high for a car company because it is at 43 times more than the company’s total profit in 2014.
FCA shares were also down a huge 33% on opening today.
The unlisted shares remaining are owned by the Agnelli family’s company Exor SpA (23%) and by Piero Ferrari, Enzo Ferrari’s son, who also retains a 10% stake. Despite the amalgamated shareholding of these two being only a minority percentage of the total share capital, the voting rights sit squarely with Ferrari and the Agnelli’s — preventing any future hostile takeover of the Ferrari.
I wonder what would happen to the Ferrari share price if they announce to leave F1… ? (Even if it is just a threat to get more favorable conditions from FOM I wouldn’t be surprised if they can only do it once because it has a direct effect on the share prices and as long as FCA needs Ferrari to pay of their debts I doubt if they can even use their quit threat to get favorable conditions from FOM because it affects share prices too much)
Good points and it does not take much to affect share prices as happened with Tesla when another one burned to a cinder while charging in Norway recently. I agree that Fiat Chrysler need the Ferrari F1 income so Ferrari have painted themselves into a corner as far as the quit threat weapon is concerned.
Here’s an article about money in the auto business, Tesla specifically, but Marchionne’s very real problems are prominent in the article, along with a mention of Ferrari. It led me to think that Ferrari’s continued inclusion in F1 is more of a front than, perhaps, we realize: http://www.businessinsider.com/tesla-has-something-alarming-in-common-with-another-car-company-2016-1?nr_email_referer=1&utm_content=BISelect&utm_medium=email&utm_source=Sailthru&utm_campaign=BI%20Select%20Weekend%202016-01-03&utm_term=Business%20Insider%20Select