Fiat Chrysler wants to separate Ferrari as a standalone public company next year, a major shift that could subject the Italian supercar maker to outside interests for the first time in 45 years.
A statement this morning outlined the company’s intent to sell off 10 percent of Ferrari in an initial public offering sometime next year, with Fiat Chrysler shareholders absorbing the rest. Currently, despite Ferrari being an official subsidiary under the Fiat Group since 1969, the newly merged Fiat Chrysler Automobiles (FCA) owns just 10 percent of it. The IPO will debut on a U.S. exchange, likely the New York Stock Exchange where Fiat Chrysler emerged two weeks earlier, along with a European offering to come.
“Coupled with the recent listing of FCA shares on the NYSE, the separation of Ferrari will preserve the cherished Italian heritage and unique position of the Ferrari business and allow FCA shareholders to continue to benefit from the substantial value inherent in this business” said John Elkann, FCA chairman.
The move essentially makes FCA CEO Sergio Marchionne eat his words. In May during an investor meeting, he declared “Ferrari is not for sale.” Clearly, Marchionne, as the new head of Ferrari, has been having second thoughts. Last month, 23-year Ferrari chairman Luca di Montezemolo resigned, allegedly over infighting with Marchionne’s direction for the automaker, which until now has been allowed to operate with almost full autonomy within Fiat. Montezemolo quipped that “Ferrari is now American,” while Marchionne has tried to prove he would keep Ferrari’s God-like status intact and that he wouldn’t “screw up the DNA.”
But with FCA’s flat-line reception among investors, Marchionne — a gearhead who has a black Enzo and loves to speed — may want to dig a little deeper into Ferrari’s pockets. Last year, Ferrari grossed more than $3.2 billion off just 6,922 cars, along with its lucrative Formula 1 team, licensing deals, and ridiculous things like Ferrari World. It made a half-billion dollars in profit. Fiat, subtracting the profitable Chrysler Group, lost $1.4 billion in that same time and has been unable to keep its mainstream brands afloat in Europe and overseas markets.
Of course, going public presents considerable risk for Ferrari. The 90 percent of Fiat Chrysler shareholders could decide to cash out later, opening up the field to venture capital firms and minority-controlling shareholders who could make big demands that Ferrari, until now, has never had to answer. Would Ferrari build an SUV, sedan, and increase annual production beyond 10,000 cars? For Montezemolo, those ideas were sacrilegious. The market may think otherwise.