Fiat Chrysler Shares Zoom Higher On Ferrari Spinoff Announcement – Forbes

Posted: Wednesday, October 29, 2014

Shares of Fiat Chrysler Automobiles climbed as much as 19% Wednesday to $11.56, soaring on the news that the company will spin off its Ferrari brand as a new publicly traded company. Current FCA shareholders will receive 90% of Ferrari’s outstanding shares with the company holding onto the remaining 10%. Shares will be listed in the United States as well as possibly on a European exchange, and may begin trading sometime next year.

Fiat has been on a wild ride in 2014. In January the Italian automaker became the sole owner of Chrysler after spending $4.35 billion for the 41% of the struggling American outfit it did not already own. (Fiat bought 59% of Chrysler out of bankruptcy in 2009). The combined company was renamed Fiat Chrysler Automobiles, the seventh largest automaker in the world.

Then, earlier this month, Fiat Chrysler began trading on the New York Stock Exchange. As FORBES’ Joann Muller reported at the time, investors met the debut with a yawn. ”Investors were in no rush to buy stock in the new company,” she wrote, “Fiat Chrysler Automobiles, amid continued skepticism over whether [CEO Sergio] Marchionne’s ambitious growth targets are achievable. Trading opened at $9 a share under the symbol FCAU, and after a brief initial burst, ended the day down 0.89% at $8.92.”

Clearly investors are more taken with the latest news, which the company is pitching as both a way to bolster its quickly changing business and to honor its past.  ”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 FCA shareholders to continue to benefit from the substantial value inherent in this business” said John Elkann, chairman of FCA in a statement. CEO Sergio Marchionne added, “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.”


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