Ferrari to pay Fiat Chrysler $2.8B before spinoff
Fiat Chrysler Automobiles NV offered additional insight into its recently announced plan to make Ferrari its own company in 2015, including an influx of cash for the new automaker.
FCA plans to take 2.25 billion euros ($2.8 billion) from the Italian luxury brand before it spins off the automaker next year, according to a 500-page-plus filing with the U.S. Securities and Exchange Commission on Thursday.
An exact timeframe of when the “distributions and transfers of cash” are expected to occur was not mentioned. But FCA CEO Sergio Marchionne, who also is Ferrari’s chairman, earlier this week said Ferrari’s initial public offering is expected to happen between the second and the third quarter of 2015.
FCA late last month announced plans to sell 10 percent of Ferrari in an IPO and distribute the rest of its 80 percent ownership to FCA shareholders for free. The remaining 10 percent of Ferrari is owned by Piero Lardi Ferrari, a son of company founder Enzo Ferrari.
Ferrari shares are expected to be listed in the U.S. and possibly a European exchange. That would be similar to FCA's shares that are primarily listed on the New York Stock Exchange with a secondary listing in Milan.
The Ferrari spinoff was announced Oct. 29 as part of a plan to bring in 4 billion euros (about $5 billion) worth of capital into FCA to fuel Marchionne’s ambitious $61 billion growth plan.
Ferrari, a racing and sports car manufacturer, was founded in 1929 by Enzo Ferrari. Fiat SpA, Chrysler Group’s former parent company, acquired 50 percent of Ferrari in 1969, then expanding its stake to the current 90 percent.
Shares of FCA were trading at $12.30 at 2:30 p.m. Thursday, up 5.4 percent. The stock opened Oct. 13, its first day of NYSE trading, at $9 per share.
Separately, Morgan Stanley on Thursday made FCA its “top pick in U.S. autos” because of the Ferrari shares that will be coming to FCA shareholders.
“Fiat Chrysler Automobiles is a risky investment, but we believe it is the most underrated auto manufacturer (imported) from Detroit and the best risk-adjusted return vis-a-vis GM and Ford,” said analyst Adam Jonas at Morgan Stanley in a note to investors.
FCA formed by Fiat SpA merging into the new company on Oct. 12.