Fiat May Sell Ferrari Stake, Magneti, Marchionne Tells Analysts
Fiat CEO Sergio Marchionne
Alessandra Benedetti/Bloomberg
Fiat Chief Executive Officer Sergio Marchionne is meeting analysts to explain the advantages of spinning off Fiat’s industrial businesses.
Fiat Chief Executive Officer Sergio Marchionne is meeting analysts to explain the advantages of spinning off Fiat’s industrial businesses. Photographer: Alessandra Benedetti/Bloomberg
Fiat SpA may sell its auto-parts division Magneti Marelli SpA and a stake in sports-car maker Ferrari SpA before consolidating Chrysler Group LLC, Chief Executive Officer Sergio Marchionne told analysts.
“Marchionne identified a Ferrari initial public offering and Magneti Marelli disposal as potential sources of cash, without giving a timeframe,” Eric Hauser, a Credit Suisse analyst based in London, said in an interview, citing comments by the CEO at a Nov. 12 meeting with analysts in Turin, Italy.
Fiat jumped to the highest price in 2 1/2 years in Milan. Marchionne was meeting analysts to explain the advantages of spinning off truck and tractor divisions to focus on carmaking. Fiat values Ferrari at 2.4 billion euros ($3.3 billion), based on the price it paid last quarter to boost its holding. The CEO said in September that he has no immediate plan to list Ferrari.
Marchionne will hold more meetings in London at the end of this month after briefing analysts in the U.S. and Italy last week, said a Fiat spokesman, who declined to comment on Marchionne’s remarks to analysts in Turin.
Fiat rose 39 cents, or 3 percent, to 13.37 euros at the 5:30 p.m. close of trading in Milan, the highest intraday price since June 4, 2008. The Turin-based company, Italy’s largest manufacturer, is the biggest gainer in the Bloomberg EMEA Auto Manufacturers Index today.
‘Clear Message’
“We left Turin with the clear message that Fiat and Chrysler will become one company,” Morgan Stanley analyst Stuart Pearson wrote in a note. “A Ferrari initial public offering and potential Marelli disposal may need to come first, according to management,” said Pearson, who has an “overweight” rating on Fiat. Morgan Stanley added Fiat to its “best ideas” list today.
Fiat, which acquired a 20 percent stake in Auburn Hills, Michigan-based Chrysler last year, has said it will raise the holding to 25 percent by the first quarter of 2011 and to 35 percent by the end of next year. Marchionne plans to take the U.S. automaker public in the second half of 2011.
“Chrysler consolidation may require crystallizing value in Ferrari and Magneti Marelli,” said UBS AG analyst Philippe Houchois, who advises buying Fiat shares.
Magneti Marelli, whose products range from lighting to engine-control systems, is aiming to expand in Russia, where it wants to become “a leading player,” CEO Eugenio Razelli said last week, as the company opened a lighting plant in the country.
Iveco, CNH Global
“Magneti Marelli will be a much tougher asset to dispose of as 50 percent of sales are to Fiat,” said Credit Suisse’s Hauser, who has a “neutral” rating on the stock. “I guess they’ll float Chrysler first and then work out how to finance the exercise of options to get to over 50 percent in Chrysler, between 2013 and 2016.”
The carving out of operations including Iveco and CNH Global NV into Fiat Industrial SpA will give Marchionne two entities to facilitate future alliances. Fiat plans to list Fiat Industrial shares on the Milan exchange Jan. 3.
The future of the Ferrari and Alfa Romeo luxury brands, which are part of Fiat’s automotive unit, has been the subject of speculation in the past months. At the Paris Motor Show in September, Volkswagen AG supervisory board Chairman Ferdinand Piech told reporters that said he’s monitoring Alfa Romeo in the event Fiat wants to sell. Piech is also interested in acquiring Ferrari, Germany’s Manager Magazin reported last week.
Marchionne and Volkswagen AG CEO Martin Winterkorn said last week in Turin that a sale of Fiat’s Alfa Romeo and Ferrari brands to the German carmaker is only a “dream.”
At the Nov. 12 analyst meeting, Marchionne reiterated that Alfa Romeo is only for sale at “ a very high price,” Morgan Stanley’s Pearson said.
Fiat owns 90 percent of Maranello, Italy-based Ferrari after paying Mubadala Development Co. 122 million euros for its 5 percent stake in the third quarter.
To contact the reporter on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
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