FCA to separate Ferrari, sell 10 per cent stake

FERRARI will be separated from Fiat Chrysler Automobiles (FCA) and 10 per cent of FCA’s stake in the Italian sportscar company will be sold on a public stock exchange in the United States or Europe next year.

The planned Ferrari spin-off announced by FCA CEO Sergio Marchionne overnight is “in connection with FCA's implementation of a capital plan appropriate to support the Group's long-term success”.

It did not take long for Mr Marchionne to announce the move after taking over as Ferrari chairman in early September as Luca di Montezemolo exited the position after a 23-year tenure.

If everything goes to plan, FCA will distribute 80 per cent of Ferrari shares among FCA shareholders, with 10 per cent sold off and Piero Ferrari, the only living son of founder Enzo, retaining his 10 per cent share.

The announcement caused FCA shares to surge 19 per cent on the New York Stock Exchange – where they debuted as a new entity including Fiat shares earlier this month – and they were still up by 12 per cent as the market closed.

“As we move forward to secure the 2014-2018 Business Plan and work toward maximizing the value of our businesses to our shareholders, it is proper that we pursue separate paths for FCA and Ferrari,” said Mr Marchionne.

“The Board supports management's determination that this transaction represents FCA's best course of action to support the long term success of the Group while at the same time substantially strengthening FCA's capital base.”

As reported, Mr Marchionne is prepared to increase Ferrari production and reduce waiting times for Ferraris, whereas Mr Montezemolo wanted to protect exclusivity and limited output to 7000 cars a year.

Mr Marchionne is also the architect of FCA’s ambitious five-year plan that was announced in May, promising seven million sales globally by 2018, a 60 per cent leap.

The Ferrari deal will help finance this ambitious target but the $US1.15 billion ($A1.31b) Milanese investment bank Mediobanca reportedly estimates it will raise a drop in the ocean compared with FCA’s debts, which are expected to peak at €11 billion (SA15.8b) by next year.

FCA chairman John Elkann said separating the Prancing Horse brand will “preserve the cherished Italian heritage and unique position of the Ferrari business and allow FCA shareholders to continue to benefit from the substantial value inherent in this business”.