Fiat Chrylser Automobiles NV (FCAU, Financial) has announced that the firm will spin off 90% of Ferrari to existing shareholders and the remaining 10% in a public offering along with a 2.5 billion convertible bond offering to fund the parent company's turnaround plan. After announcing this plan on Wednesday shares soared 19% upwards. This plan is allowed to unlock value for shareholders and at the same time its the capital needed to fund the firms turnaround plan.
In a statement, Chairman John Elkann said, "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 Fiat Chrysler Automobiles NV (FCAU, Financial) shareholders to continue to benefit from the substantial value inherent in this business”.
This plan came after the firm acquired the rest of Chrylser that the firm didn't owned and then combined both companies operations into one under Fiat Chrylser Automobiles NV. The spinoff plan for luxury car brand Ferrari was years in the making; sometime next year Ferrari will go public and the 90% of shares distributed to shareholders will lead to shares of Ferrari after the IPO pop to slide, as they sell their shares after the IPO. There will be a chance in the next few years for a long-term investor to buy a stake in Ferrari at far below the IPO price.
