FIAT Chrysler Automobiles announced today that it will spin off its luxury-sport car brand Ferrari into a separate company, with its shares to be listed in the United States and possibly Europe.
The company says that this separation is part of an effort to raise more capital to support the newly-merged carmakers’ future success and growth in the industry.
FIAT shareholders voted to merge FIAT with Chrysler earlier this year – a transaction that was completed earlier this month. The merge created the new company FIAT Chrysler Automobiles (FCA). Luxury car brands Maserati and Ferrari were vital components of this merge.
FCA CEO Sergio Marchionne said in a statement that it was proper that both FCA and Ferrari pursue separate paths. This spinoff that Ferrari will be making has been speculated for quite some time now, with the benefit being that this could be a way of unlocking new value in Ferrari, while preserving the cherished Italian heritage.
Ferrari has built a name for itself as a world-class brand and has a reputation for its exclusivity. Historically, it has capped production at 7,000 cars per year to ensure demand will always surpass supply, keeping the desire for one of these vehicles consistently high.
However, there has recently been a somewhat awkward management transition at Ferrari that caused long-time chairman Luca di Montezemolo to resign after a public dispute with Marchionne. Since the transition, the company said it will increase production by five per cent this year to prevent the waiting list from becoming too long.
About 10 per cent of Ferrari’s shares will be up for grabs, while the other 90 per cent of shares will be distributed to current FIAT Chrysler shareholders.
