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Fiat Chrysler to spin off Ferrari into separate unit | Fiat Chrysler to spin off Ferrari into separate unit |
(about 3 hours later) | |
Fiat Chrysler Automobiles (FCA) plans to spin off Ferrari and sell a 10% stake in the luxury carmaker on the stock market. | Fiat Chrysler Automobiles (FCA) plans to spin off Ferrari and sell a 10% stake in the luxury carmaker on the stock market. |
The remaining Ferrari shares would be distributed among FCA shareholders. | The remaining Ferrari shares would be distributed among FCA shareholders. |
The carmaker wants to complete the spin-off next year, with Ferrari shares listed in the US and possibly having a European listing too. | The carmaker wants to complete the spin-off next year, with Ferrari shares listed in the US and possibly having a European listing too. |
The sale is part of a bigger plan by FCA to raise €48bn ($61bn; £38bn) to fund an investment plan. | The sale is part of a bigger plan by FCA to raise €48bn ($61bn; £38bn) to fund an investment plan. |
Fiat Chrysler chief executive Sergio Marchionne said it was "proper that we pursue separate paths for FCA and Ferrari" following the completion of the merger of Chrysler and Fiat. | |
The combined firm listed on the New York Stock Exchange on 12 October. | |
Since then there has been management upheaval at Ferrari. | |
President Luca di Montezemolo left the company after a public spat over strategy with Mr Marchionne. | |
Mr Marchionne had been a vocal critic of the on-track performance of Ferrari's Formula One team, particularly its lack of world titles since 2007. He has pledged to get the team back to winning ways. | Mr Marchionne had been a vocal critic of the on-track performance of Ferrari's Formula One team, particularly its lack of world titles since 2007. He has pledged to get the team back to winning ways. |
Rescue deal | Rescue deal |
Earlier this month, he described the merger between Fiat and Chrysler as "the end of a long historical cycle". | Earlier this month, he described the merger between Fiat and Chrysler as "the end of a long historical cycle". |
That merger began when Chrysler filed for Chapter 11 bankruptcy protection in April 2009. | That merger began when Chrysler filed for Chapter 11 bankruptcy protection in April 2009. |
Chrysler had agreed a deal with its creditors including JP Morgan, Citigroup and Goldman Sachs, brokered by the US Treasury and Obama administration, to write off two-thirds of the car manufacturer's debt. | Chrysler had agreed a deal with its creditors including JP Morgan, Citigroup and Goldman Sachs, brokered by the US Treasury and Obama administration, to write off two-thirds of the car manufacturer's debt. |
But a group of hedge and investment funds refused to accept the last-minute debt-for-equity package, which would have seen Chrysler's $6.9bn (£4.6bn) debt cancelled in return for a cash payment of $2bn. | But a group of hedge and investment funds refused to accept the last-minute debt-for-equity package, which would have seen Chrysler's $6.9bn (£4.6bn) debt cancelled in return for a cash payment of $2bn. |
When it emerged from bankruptcy later that year, Fiat owned 35% of the company, alongside the United Auto Workers pension fund on 41.5% and the US and Canadian governments owning the remainder. | When it emerged from bankruptcy later that year, Fiat owned 35% of the company, alongside the United Auto Workers pension fund on 41.5% and the US and Canadian governments owning the remainder. |
Over the last five years, Fiat has bought out Chrysler's other owners, buying the final tranche of the car manufacturer from the United Auto Workers pension fund in January. | Over the last five years, Fiat has bought out Chrysler's other owners, buying the final tranche of the car manufacturer from the United Auto Workers pension fund in January. |
A Ferrari spin-off had long been anticipated by industry experts as Mr Marchionne seeks to maximise values from the group's various brands. | A Ferrari spin-off had long been anticipated by industry experts as Mr Marchionne seeks to maximise values from the group's various brands. |
Profit | Profit |
There are no plans to spin off FCA's other luxury brands, including Alfa Romeo and Maserati, it said. | There are no plans to spin off FCA's other luxury brands, including Alfa Romeo and Maserati, it said. |
The announcement of the Ferrari spin-off comes as FCA said it returned to profit in the third quarter on a strong rise in sales of its luxury brands, as well as revenue gains in North America and Asia. | The announcement of the Ferrari spin-off comes as FCA said it returned to profit in the third quarter on a strong rise in sales of its luxury brands, as well as revenue gains in North America and Asia. |
FCA reported a net profit of €174m for the three months to the end of September, compared with €15m a year earlier. | FCA reported a net profit of €174m for the three months to the end of September, compared with €15m a year earlier. |
Revenues were 14% higher at €23.5bn. Luxury brand sales increased 35% overall, while North America saw a 20% rise in revenues and sales in Asia rose 30%. Both markets helped offset a 12% fall in revenue in a weak Latin American market. | Revenues were 14% higher at €23.5bn. Luxury brand sales increased 35% overall, while North America saw a 20% rise in revenues and sales in Asia rose 30%. Both markets helped offset a 12% fall in revenue in a weak Latin American market. |
Analysis: Theo Leggett, BBC business correspondent | |
Ferrari has effectively been controlled by Fiat since 1969 - although the Ferrari family continued to run the F1 team until 1988. | |
The two companies have been intrinsically linked, with Ferrari providing the cachet and snob value, while Fiat had the engineering and financial muscle. | |
But Fiat itself is now undergoing momentous change. | |
Following the merger with Chrysler, it has embarked on an ambitious and very costly expansion plan. | |
It needs money, and the spin off of Ferrari is all about unlocking value. | |
The sale of a 10% stake on the stock market will allow Fiat to cash in on its investment - while ensuring enough of the company remains in Italian hands to head off any political protests about an Italian icon potentially falling into foreign hands. |