Sportgamma Posted January 2, 2014 Share Posted January 2, 2014 The agreement to pay $1.75 billion to the U.A.W. means that Fiat will have paid a total $3.7 billion to acquire Chrysler, much less than the $36 billion Daimler-Chrysler paid for the company in 1998 or the $7.4 billion Cerberus Capital Management paid to acquire an 80 percent stake in 2007. http://www.nytimes.com/2014/01/02/business/fiat-in-deal-with-union-will-buy-rest-of-chrysler.html?ref=business Link to comment Share on other sites More sharing options...
bmichaud Posted January 2, 2014 Share Posted January 2, 2014 Case in point why it's still a table pounding buy...up only 14 to 16% in Europe today!! Link to comment Share on other sites More sharing options...
phil_Buffett Posted January 2, 2014 Share Posted January 2, 2014 what a nice Price Action today. love it 8) Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 2, 2014 Share Posted January 2, 2014 Chrysler Brings Extra Debt Dowry to Fiat http://blogs.wsj.com/moneybeat/2014/01/02/fiat-wins-equity-bet-with-chrysler-deal-but-debt-issues-dont-disappear/ Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 2, 2014 Share Posted January 2, 2014 Fiat's Chrysler Trick Is No Panacea Acquisition Won't Solve All Fiat's Problems If you're going to buy a company, it helps to get the acquisition target to pay most of the cost. That is the trick Fiat F.MI +14.38% has pulled off in a deal to buy the 41.5% of Chrysler it didn't already own for a total of $4.35 billion from the VEBA Trust, a health-care fund affiliated to the United Auto Workers union. Chrysler will contribute $1.9 billion of the asking price immediately via a dividend paid to Fiat and VEBA; it will pay the trust a further $700 million over the next four years. The Italian company itself is on the hook for just $1.75 billion. Shifting the funding burden to Chrysler means Fiat should avoid the need for a rights issue. It also means an end to its long-running dispute with VEBA over how to value the trust's stake in Chrysler that had latterly reached the courts. The prospect of a Chrysler flotation, previously seen as one way of ending that disagreement, has now hit the buffers too. That has all given Fiat investors reason to cheer: Its shares jumped 13% on Thursday. Consolidating Chrysler fully brings Fiat Chief Executive Sergio Marchionne's dream of building a global auto-making powerhouse closer. Certainly Chrysler has been vital to Fiat recently, as the Italian company suffered in its downbeat core European markets. The Fiat Group made a €655 million ($900.3 million) net profit in the first three months of 2013; without Chrysler, that would have been a €729 million loss. Still, however cleverly Fiat splits the cost of buying out VEBA, the money is still coming from the group as a whole—leaving it as Europe's most indebted auto maker bar Peugeot, according to Citi. Including Chrysler's €8.7 billion pension deficit means the Fiat group has an enterprise value of over €28 billion, just over four times its expected earnings before interest, tax, depreciation and amortization—not especially cheap relative to the rest of the auto sector, according to Sanford C. Bernstein. Fiat still faces chronic overcapacity in Europe; it is subscale in Asia while its earnings in South America are on the slide. Bringing Chrysler fully into the fold won't solve all of Fiat's problems. http://online.wsj.com/news/articles/SB10001424052702303640604579296192064586278 Link to comment Share on other sites More sharing options...
muscleman Posted January 2, 2014 Share Posted January 2, 2014 what a nice Price Action today. love it 8) Yeah! I am very excited that I increased the position from 12% to 33% in December. This is my first big bet since I started learning investing. :D Link to comment Share on other sites More sharing options...
Grenville Posted January 2, 2014 Share Posted January 2, 2014 I'm a little late on this idea. Just starting the diligence. Had a question for board members. What is the equivalent to the 10K when researching FIATY? The reason I ask is that in the US, the 10K and annual report are different. One can be a marketing document without all the relevant details. I found the annual report on Fiaty's website. I just want to make sure there isn't another place I should look. Link to comment Share on other sites More sharing options...
plato1976 Posted January 2, 2014 Share Posted January 2, 2014 I think even from the ev/ebitda perspective fiat is a cheap one Cheaper than ford Similar to GM which by itself is undervalued Certainly cheaper than most other producers Fiat's Chrysler Trick Is No Panacea Acquisition Won't Solve All Fiat's Problems If you're going to buy a company, it helps to get the acquisition target to pay most of the cost. That is the trick Fiat F.MI +14.38% has pulled off in a deal to buy the 41.5% of Chrysler it didn't already own for a total of $4.35 billion from the VEBA Trust, a health-care fund affiliated to the United Auto Workers union. Chrysler will contribute $1.9 billion of the asking price immediately via a dividend paid to Fiat and VEBA; it will pay the trust a further $700 million over the next four years. The Italian company itself is on the hook for just $1.75 billion. Shifting the funding burden to Chrysler means Fiat should avoid the need for a rights issue. It also means an end to its long-running dispute with VEBA over how to value the trust's stake in Chrysler that had latterly reached the courts. The prospect of a Chrysler flotation, previously seen as one way of ending that disagreement, has now hit the buffers too. That has all given Fiat investors reason to cheer: Its shares jumped 13% on Thursday. Consolidating Chrysler fully brings Fiat Chief Executive Sergio Marchionne's dream of building a global auto-making powerhouse closer. Certainly Chrysler has been vital to Fiat recently, as the Italian company suffered in its downbeat core European markets. The Fiat Group made a €655 million ($900.3 million) net profit in the first three months of 2013; without Chrysler, that would have been a €729 million loss. Still, however cleverly Fiat splits the cost of buying out VEBA, the money is still coming from the group as a whole—leaving it as Europe's most indebted auto maker bar Peugeot, according to Citi. Including Chrysler's €8.7 billion pension deficit means the Fiat group has an enterprise value of over €28 billion, just over four times its expected earnings before interest, tax, depreciation and amortization—not especially cheap relative to the rest of the auto sector, according to Sanford C. Bernstein. Fiat still faces chronic overcapacity in Europe; it is subscale in Asia while its earnings in South America are on the slide. Bringing Chrysler fully into the fold won't solve all of Fiat's problems. http://online.wsj.com/news/articles/SB10001424052702303640604579296192064586278 Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 2, 2014 Share Posted January 2, 2014 Fiat-Chrysler to seek NYSE listing this year Carmaker Fiat-Chrysler is aiming to list in New York within the year, underling the group’s emergence as a US-centric organisation following chief executive Sergio Marchionne’s successful broker of a full merger of the US group with its Italian partner. In a long-awaited deal, Fiat announced on New Year’s day it will buy the 41.5 per cent of Chrysler that it does not already own from the Veba union healthcare trust for a total of $4.35bn. The completion of the deal by January 20 will be followed by a shake up of the merged group’s corporate structure in line with its global footprint, banking sources said. Half of Fiat-Chrysler’s combined volumes come from North America. Banking sources said CNH Industrial, a sister company to Fiat-Chrysler, is a template for the governance and corporate structure of a fully integrated Fiat-Chrysler. Born out of Fiat, the industrial goods group is a Netherlands-registered company, listed in New York, with a secondary listing in Milan and tax domicile in the UK. Fiat shares rose 16 per cent on news of the deal to €6.92, the biggest intraday gain since 2009. The stock had risen 57 per cent in 2013. Max Warburton, an analyst at Bernstein Research, said the costs and financing of the deal were more favourable to Fiat than the market expected. “The deal successfully secures Fiat’s operational and financial future,” he added. Fiat, which already owns 58.5 per cent of Chrysler, will pay the trust $1.75bn in cash when the deal closes. Chrysler will contribute $1.9bn through a special dividend to complete the transaction for the 41.5 per cent stake. Chrysler will also pay the trust $700m in four annual instalments, with the first to be made when the deal closes. Fiat said it would not need to raise cash to complete the deal. Fiat-Chrysler’s net debt will rise to about €10bn excluding pension contributions, said Philip Watkins, car analyst at Citigroup. People familiar with Mr Marchionne’s thinking say a fully merged Fiat-Chrysler could issue a convertible bond in the region of €1bn to €1.5bn in tandem with its launch on the New York Stock Exchange to help ease that debt load. The full merger of Fiat and Chrysler crowns Mr Marchionne’s decade-long turnround of the Italian and US carmakers and underlines his reputation as a consummate dealmaker. It also shifts focus sharply on to succession planning at the group. People close to Mr Marchionne, one of the longest running car industry chief executives, expect the three-year business plan due to be presented in the spring to be his last triennial plan for the group. http://www.ft.com/intl/cms/s/0/ce546f0c-73c7-11e3-a0c0-00144feabdc0.html?siteedition=intl#axzz2pGdN3tye Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 2, 2014 Share Posted January 2, 2014 Marchionne Completes Fiat-Chrysler Mission on a Florida Beach http://www.businessweek.com/news/2014-01-02/marchionne-completes-fiat-chrysler-mission-on-a-florida-beach#p1 Link to comment Share on other sites More sharing options...
LC Posted January 2, 2014 Author Share Posted January 2, 2014 I'm a little late on this idea. Just starting the diligence. Had a question for board members. What is the equivalent to the 10K when researching FIATY? The reason I ask is that in the US, the 10K and annual report are different. One can be a marketing document without all the relevant details. I found the annual report on Fiaty's website. I just want to make sure there isn't another place I should look. 20F I believe. Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 2, 2014 Share Posted January 2, 2014 http://online.wsj.com/news/articles/SB10001424052702303870704579296312287689146 The Fiat-Chrysler Combination Still Faces Hurdles Merged Company Must Address a Dearth of Recent Research and Development Spending Link to comment Share on other sites More sharing options...
phil_Buffett Posted January 2, 2014 Share Posted January 2, 2014 wsj.com with a lot of negative article´s today about fiat Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 2, 2014 Share Posted January 2, 2014 http://dealbook.nytimes.com/2014/01/02/chrysler-deal-puts-fiat-chief-in-the-fast-lane/?_r=0 Chrysler Deal Puts Fiat Chief in the Fast Lane Link to comment Share on other sites More sharing options...
Grenville Posted January 2, 2014 Share Posted January 2, 2014 I'm a little late on this idea. Just starting the diligence. Had a question for board members. What is the equivalent to the 10K when researching FIATY? The reason I ask is that in the US, the 10K and annual report are different. One can be a marketing document without all the relevant details. I found the annual report on Fiaty's website. I just want to make sure there isn't another place I should look. 20F I believe. LC, Thanks. I couldn't find the 20F for 2012 on the Fiat website. All I find is the annual report. Link to comment Share on other sites More sharing options...
fareastwarriors Posted January 2, 2014 Share Posted January 2, 2014 We retain our Reduce rating, TP raised from EUR4.4 to EUR5 Fiat shares trade at 29% EV/Sales and 3x EV/EBITDA on our updated 2014 estimates, at a significant premium to European peers (19% and 2.1x) and close to US OEM multiples (32% and 3.8x) despite Chrysler being a much less profitable and cash-generative business than Ford or GM historically. The depressed earnings multiple (5.4x 2014E) has to be put into perspective with a balance sheet structure that remains inadequate and will still require asset disposals and/or capital measures at one point, in our view. Our SOP implies a fair value close to EUR5, our new target price (up from EUR4.4).FIAT__Kepler_010214_7158.pdf Link to comment Share on other sites More sharing options...
muscleman Posted January 2, 2014 Share Posted January 2, 2014 Is Jim Chanos still short Fiat? That would be a bad day for him :) Link to comment Share on other sites More sharing options...
Phaceliacapital Posted January 2, 2014 Share Posted January 2, 2014 We retain our Reduce rating, TP raised from EUR4.4 to EUR5 Fiat shares trade at 29% EV/Sales and 3x EV/EBITDA on our updated 2014 estimates, at a significant premium to European peers (19% and 2.1x) and close to US OEM multiples (32% and 3.8x) despite Chrysler being a much less profitable and cash-generative business than Ford or GM historically. The depressed earnings multiple (5.4x 2014E) has to be put into perspective with a balance sheet structure that remains inadequate and will still require asset disposals and/or capital measures at one point, in our view. Our SOP implies a fair value close to EUR5, our new target price (up from EUR4.4). Thanks, to be honest, I don't really like Kepler's research... The sellside is so negative on Fiat, unbelievable. Link to comment Share on other sites More sharing options...
phil_Buffett Posted January 2, 2014 Share Posted January 2, 2014 We retain our Reduce rating, TP raised from EUR4.4 to EUR5 Fiat shares trade at 29% EV/Sales and 3x EV/EBITDA on our updated 2014 estimates, at a significant premium to European peers (19% and 2.1x) and close to US OEM multiples (32% and 3.8x) despite Chrysler being a much less profitable and cash-generative business than Ford or GM historically. The depressed earnings multiple (5.4x 2014E) has to be put into perspective with a balance sheet structure that remains inadequate and will still require asset disposals and/or capital measures at one point, in our view. Our SOP implies a fair value close to EUR5, our new target price (up from EUR4.4). Thanks, to be honest, I don't really like Kepler's research... The sellside is so negative on Fiat, unbelievable. i stop Long time ago to read bullshit. kepler and all of the other brilliant and hyper intellegient Analysts are in the bullshit area ;D ;D ;D Link to comment Share on other sites More sharing options...
phil_Buffett Posted January 3, 2014 Share Posted January 3, 2014 Is Jim Chanos still short Fiat? That would be a bad day for him :) http://www.valuewalk.com/2014/01/fiat-chrysler-catches-shortsellers-guard/ chanos sold his short fiat at a loss in october Link to comment Share on other sites More sharing options...
bmichaud Posted January 3, 2014 Share Posted January 3, 2014 And....fiat is down 4% today. Buy the dips :) Link to comment Share on other sites More sharing options...
merkhet Posted January 3, 2014 Share Posted January 3, 2014 Is Jim Chanos still short Fiat? That would be a bad day for him :) http://www.valuewalk.com/2014/01/fiat-chrysler-catches-shortsellers-guard/ chanos sold his short fiat at a loss in october That's interesting. I had lunch with Professor Chanos early in October and tried to ask him about his Fiat thesis. He was fairly mum on the subject. Link to comment Share on other sites More sharing options...
intensityjp Posted January 3, 2014 Share Posted January 3, 2014 Hey guys great thread thanks for all the work. I had a question regarding the EV and specifically the Net Debt & Pension calculation. Referring to this writeup: http://www.gwinvestors.com/Main/Blog/Entries/2013/5/2_Fiat_SpA_(F_IM)__The_Bottom.html This article really helped me understand the upside for this situation, however in table 3 the author lists Net Debt & Pension at 16.3B euro. It was written in May of 2013 at which time the Q1 consolidated statement read 29B debt, 11.7 in Employee Benefits minus 18.8B Cash and Current Investments which nets to 21.9B. This is obviously materially off from 16.3. In the latest filings, the numbers are 29B debt, 10.4B employee benefits minus 16.8B Cash which nets 22.6. What am I missing from my calculation? Thanks! Link to comment Share on other sites More sharing options...
phil_Buffett Posted January 3, 2014 Share Posted January 3, 2014 to all other Longs in Fiat. what do you are thinking about the possibilty for a ferrari spinoff after the probably fiat listing in new York this year? Link to comment Share on other sites More sharing options...
Ian L Posted January 3, 2014 Share Posted January 3, 2014 to all other Longs in Fiat. what do you are thinking about the possibilty for a ferrari spinoff after the probably fiat listing in new York this year? I would doubt it. Ferrari helps out with Maserati and Alfa Romeo. It is such a valuable brand to have, I doubt they would separate it out. Link to comment Share on other sites More sharing options...
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