Ferrari IPO Process Begins

Exotic maker said to be valued around $9.8 billion.

by on Oct.12, 2015

Ferrari's "prancing pony."

Fiat Chrysler Automobiles has launched the long-awaited Initial Public Offering of its Ferrari brand.

As part of what it says will be a “series of transactions to separate Ferrari from FCA,” the maker said Monday it expects to price the exotic sports carmaker’s shares at between $48 and $52 apiece. That would value the entire company at about $9.8 billion – slightly less than the $12 billion some industry analysts had been expecting.

By the Numbers!

FCA CEO Sergio Marchionne had long resisted a spin-off of the Ferrari brand, but apparently relented as it became apparent the trans-Atlantic automaker needed cash to fund future product development programs for its other U.S. and European brands.

Among other things, 5 billion euros will be invested in the Alfa Romeo brand to bring out eight new products by 2018, a plan expected to increase Alfa’s global sales 550% — to 400,000 annually.

(Click Here for a first look at the new Alfa Romeo Giulia.)

FCA also needs cash to develop the high-mileage and low-emissions vehicles needed to meet new government mandates in the U.S., Europe and other parts of the world.

Ferrari unveiled the new 488 Spider in Frankfurt.

The IPO will initially cover only 10% of Ferrari’s share capital – which will be traded on the New York Stock Exchange under the symbol RACE. There will be no secondary listing in Europe. No start date for trading has yet been announced.

FCA has not set a hard date for spinning off another 80% stake in Ferrari, either, but it is expected to distribute those shares to FCA shareholders sometime next year. The remaining 10% stake will remain in the hands of Piero Lardi Ferrari, son of the sports car company’s founder, Enzo Ferrari.

(Ferrari unveils the new 488 Spider. Click Here to check it out.)

The family of Fiat’s founding Agnelli family, meanwhile, are expected to take control of a large portion of Ferrari stock so, together with Piero Ferrari they are expected to be in a position to prevent an unwanted takeover, according to industry analysts.

Known for both its exotic and highly desired street cars, as well as its prowess on the Formula One circuit, Ferrari could undergo a number of changes as a result of the planned IPO.

In a recent prospectus, Ferrari said, “We pursue a low volume production strategy in order to maintain a reputation of exclusivity and scarcity among purchasers of our cars and deliberately monitor and maintain our production volumes and delivery wait-times to promote this reputation.”

What defines “exclusivity” is, of course, a matter of debate, and Ferrari may take a cue from ultra-luxury marques like Bentley, that seem to have run into little resistance as they’ve pushed well above and beyond once firm caps on production.

FCA CEO Sergio Marchionne and former Ferrari CEO Luca di Montezemolo celebrated the launch of the $1 million Ferrari Enzo ultra-car - but disagreed over expansion plans.

The Italian automaker already has lent its name and logo to Ferrari-branded items like sunglasses, watches and even laptop computers. It also may add new entertainment venues like the one it now operates in the Middle East. Ferrari World Abu Dhabi is the world’s largest indoor theme park.

The real question is what it will do on the car side. Most observers expect production of traditional models to increase. But Ferrari could take a cue from Bentley and rival Rolls-Royce and target those who can’t quite reach high enough for its current products.

“They may opt to go down-market to grow their volumes,” said analyst Joe Phillippi, of AutoTrends Consulting.

(Fiat’s reborn 124 Spider to make debut. Click Here for a sneak peek.)

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One Response to “Ferrari IPO Process Begins”

  1. Mike says:

    If Ferrari is worth $10 billion, a Chrysler assembly worker is worth every bit of $29 an hour.

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