Fiat Group might sell its
Magneti Marelli components division and bring its
Ferrari division to an IPO as it seeks to hurriedly
raise funds to both pay back major debts and fund a
substantial increase in its minority stake in Chrysler
Group as it seeks to integrate the two companies.
Fiat Group CEO Sergio
Marchionne met analysts last Friday to outline the
latest moves in his ever chopping-and-changing plans to
break up the century-old Fiat Group, generate value, and
create a new automotive company that will be merged into
the Chrysler Group to unlock the economies of scale and
global reach that he perceives as being vital for the
future.
According to
Morgan Stanley's financial analyst Stuart Pearson
yesterday: "We left Turin with the clear message that
Fiat and Chrysler will become one company."
Meanwhile Deutsche Bank's analyst at the
meeting added that: "Marchionne aims to have one single
listed unit between Fiat and Chrysler before the end of
2014."
"Marchionne identified
a Ferrari initial public offering and Magneti Marelli
disposal as potential sources of cash, without giving a
timeframe,” said Credit Suisse analyst Eric Hauser in an
interview yesterday reported Bloomberg, while: "A
Ferrari initial public offering and potential Marelli
disposal may need to come first, according to
management," added Morgan Stanley's Pearson. How the
Magneti Marelli components division could be offered for
external sale when it is almost totally reliant on the
Fiat Group for its sales and revenue wasn't explained.
Fiat Group actually
sold a five percent stake in Ferrari to Abu Dhabi's
investment group Mubadala Development Co. the last time
it was cash strapped in the middle of the last decade
when it was hastily trying to raise funds, and
reportedly the buy-back option on this sale was
exercised during the third quarter of 2010 at a cost of
122 million euros. Marchionne was in Abu Dhabi at the
weekend, along with other Fiat Group board members, to
hopefully see Scuderia Ferrari wrap up the F1 World
Drivers' Championship title, a scenario that
dramatically didn't play out to plan during Sunday's
grand prix. The return of the five percent stake
increases Fiat's shareholding to 90 percent and it could
float 39 percent of the Group's most valuable division
to raise funds while still retaining overall control.
With the VW Group waiting in the wings to
pick up the Fiat Group's Alfa Romeo division, and the
deal now just awaiting being given the green light, the
tone from senior management yesterday was noticeably
different to recent comments. From a steady stream of
outright denials, with just last week the proposal being
described as being no more than a "dream", it was
notable that Morgan Stanley's Pearson reported that Alfa
Romeo was now available at "a
very high price."
