By on November 19, 2010

Abu Dhabi’s sovereign wealth fund, via its investment vehicle AMubadala Development Co, has sold back its 5 per cent stake in Ferrari to Fiat. It’s not that the sheiks were tired of Ferrari. Fiat wanted their shares back. Fiat had an option that gave it the right to buy back the stake that Mubadala had acquired in 2005 from Mediobanca, Italy’s largest investment bank for €114 million, domain-b reports.

Fiat paid €122m ($167m) to buy back the stock. Now their holdings climbed from  85 percent to 90 percent. Why would you want 90 percent in a small sports car maker if you already have 85 percent, and you need every penny of cash?

For a little more than a week, there have been rumors on the circuit that Fiat wants to sell all or half of Ferrari to raise cash. And who would buy the horsey brand? Of course, Volkswagen was the usual suspect. Germany’s Manager Magazine claimed that Piech was interested in buying Alfa Romeo, but that “the real object of his desire” would be Ferrari. It’s missing in Piech’s Porsche-Bugatti-Lamborghini collection.

Last week, both Marchionne and Winterkorn dismissed any flirtations. Both said in unusual unison that such plans are “just a dream.” Ok, but then why is Ferrari being prettied up for a sale? And who else than the inveterate veteran sport car collector in Wolfsburg would be interested? If won’t be cheap. If  5 percent go for $167m, then 50 percent would be worth at least $2b. Remember, Fiat exercised an option, and an option is rarely exercised at market value. You usually only exercise an option if you can sell the underlying stock for much more.

Who might be the buyer? Any ideas?

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16 Comments on “Fiat Fixing Up Ferrari For Quick Sale?...”

  • avatar

    The Chinese???

  • avatar

    Me.  Instead of buying a Ferrari I’m just buying Ferrari.
    It’s the only way to get around the wait list these days.

  • avatar

    I think that if Ferrari would move out of Italian ownership the brandvalue would take a hit and therefore not many parties who are interested in making money will be interested. Ferrari is perhaps THE national symbol of Italy. To illustrate, when Ferrari lost the F1 driver championship with Alonso last weekend, an Italian minister called for Luca di Montezemolo to resign (don’t know if this was reported on TTAC). When Ferrari wins, Italy wins and the churchbells are clung in Maranello. Customers buy in to that, or I would anyway. In every car review about Lamborghinis here in Europe, they usually still mention it’s now owned by VW as a bad thing (on balance; there are obviously good things about it, like you can now expect it to work and you can sit in the seats without hurting yourself, but it’s slated for it as well cause a bit of the passion and character is gone).

    Also, I read FIAT did confirm VW came knocking for Alfa, but FIAT claimed ‘they would only sell it at a very high price’.

  • avatar

    $4 bn isn’t too much if you take into account the $500 mil. a year F1 team and the interminable licensing of the Ferrari name to Mattel, Acer, Panerai etc. etc.

  • avatar
    M 1

    Maybe Congress has developed a taste for auto companies. And what’s a few billion these days? Peanuts.

  • avatar

    Maybe they’ll use Ford as a stalking horse again. Then Ford can get p.o.’d again and expend some effort to whip Ferrari in F1, since Ferrari doesn’t really care about LeMans anymore.

  • avatar

    If I was Marchionne I would be looking East for money, in the form of a tie-up with a Chinese or Japanese manufacturer.  But keep Ferrari under Italian wings.
    What Fiat lacks right now is the cash and credit to realize Marchionne’s ambition, it is not lacking in direction.
    There are two Japanese makers that have lots of cash and credit, Mitsubishi and Mazda, but lack direction.  The Mitsubishi and Sumimoto groups are cash-rich right now and are looking for foreign mergers and acquisition as the yen is incredibly strong.
    These are also groups that are expanding aggressively in lithium and rare-earth mining operations globally, not to mention their network of steel, shipping, and construction infrastructure.  They have the massive vertical infrastructure that could really aid an automotive manufacturer much like the efficiency gains that Toyota and Hyundai benefit from.  Daimler’s greatest failure with Mitsubishi was not properly utilizing their relationship of the Mitsubishi group and its resources.
    A second option would be to strike a deal with a Chinese automaker.  China will be Ferrari’s largest market, and they are cash rich. They are also desperate for some international partner that would introduce Chinese automotive exports to the world, and is so far being outdone by South East Asian countries like Thailand (which is quickly becoming Asia’s automotive manufacturing hub due to cheap labor and ASEAN FTA agreements).
    Either way Fiat will have no problems unloading Ferrari for a nice price.  Its a strong brand.  There will be quite a few Middle Eastern and Chinese buyers willing to gobble up shares, and even the VW group may swoop in to consolidate their luxury brand dominance.  But Marchionne would be wise to think beyond a quick payday.

    • 0 avatar

      The Japansese car companies have not, nor will ever likely buy a FOREIGN firm. That’s not the Japanese way.  They tend to be focused on their own brand and products, such that Ford is now, and that is really the way it should be. Most foreign acquisitions of one car company of another have resulted in less than stellar results – the only cases of success are partnerships (such as Renault – Nissan) and for companies such as Rolls Royce and Bentley, or other small niche manufacturers that do not rely on volume (Lambo)
      Volkswagen, when acquiring large mass-market companies such as Seat and Skoda is really using the same old platforms, and very similar cars are being made that are shared among the range, hence it’s success. But for distinct and vastly different cars, I don’t recall any success  – e.g. Ford and Volvo, Ford and Land Rover / Jaguar, BMW and Rover, Mercedes and Chrysler.
      The idea that Mazda or Mitsubishi would buy Ferrari is unthinkable. it takes only the poorly run companies such as GM or Ford to put money in these sinkhole ideas, as the return is poor on the investment.

    • 0 avatar

      @ mhadi
      If you’ve been following the news, Japanese firms are on a buying spree right now boosted by the strong yen.  Particularly the Mitsubishi group.  Japanese companies bought $72.5 billion worth of foreign companies this year, compared with $24.4 billion a year ago, this is in a global economy where foreign M&A have fallen.
      Let’s also consider that both Mitsubishi and Mazda are companies that have had close relationships with foreign brands in the past, moreover, their parent companies are cash rich and have credit.  They aren’t Toyota and Honda.
      Also, my suggestion that Mitsubishi/Mazda wasn’t to purchase Ferrari, it was to invest into FIAT and keep Ferrari under FIAT.  Mitsubishi/Mazda are lacking focused leadership and economies of scale.  Marchionne can provide both, but he needs money.  Which the Japanese can provide in high-value yen.  He can be their Ghosn.

  • avatar
    John Horner

    The smart way for Fiat to extract some cash from Ferrari would be to float a portion of their shares on the public markets while still retaining majority ownership for themselves. Ferrari aficionados would probably pay dearly to have a shareholder’s certificate mounted on the den wall.

  • avatar

    If the buyer is VW that would mean Ferrari and Lambo in one family.  That would be a development of operatic, nay Biblical proportions!

  • avatar

    Would Magna have the cash to pull it off?

    They were already sniffing around Pininfarina.

  • avatar

    Why would a 90-percent interest in Ferrari be so much more attractive than an 85-percent interest? Both stakes would effectively control the company.
    But man, if there was ever a halo brand, it’s Ferrari. Hard to see Fiat coughing that up unless they’re desperate.

  • avatar

    Toyota / Lexus is the dark horse. Think cash flow, think profits, think LFA.

  • avatar

    In Italy they were requesting Montezemolo’s head on the F1 results, I think both him and Marchionne would get crucified in the middle of Torino if they sell Ferrari.
    And then, dismembered, etc…

  • avatar

    This is an early April Fools joke. There’s no way that FIAT would ever get rid of Ferrari.

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