merkhet Posted October 29, 2014 Share Posted October 29, 2014 Jay is referencing the $2.5 billion in mandatory convertible securities announced today. Link to comment Share on other sites More sharing options...
phil_Buffett Posted October 29, 2014 Share Posted October 29, 2014 last Weekend i changed my Profile Picture here. and today we get the info that we receive ferrari Shares. how nice is that? i love it!!!! :) Link to comment Share on other sites More sharing options...
hillfronter83 Posted October 29, 2014 Share Posted October 29, 2014 last Weekend i changed my Profile Picture here. and today we get the info that we receive ferrari Shares. how nice is that? i love it!!!! :) Now you can change the picture to Maserati :) Link to comment Share on other sites More sharing options...
Palantir Posted October 29, 2014 Share Posted October 29, 2014 I don't understand why they would do this though....Ferrari and Maserati are the crown jewels of Fiat and Ferrari would probably be better housed inside a larger manu...what benefit could there be to separating them? Link to comment Share on other sites More sharing options...
MYDemaray Posted October 29, 2014 Share Posted October 29, 2014 I don't understand why they would do this though....Ferrari and Maserati are the crown jewels of Fiat and Ferrari would probably be better housed inside a larger manu...what benefit could there be to separating them? They are only floating 10% right? My guess is this is just a way to get the market to recognize the full value of Ferrari embedded in the rest of FCA. That will lift FCA equity price, and perhaps make additional financing down the road easier. Link to comment Share on other sites More sharing options...
merkhet Posted October 29, 2014 Share Posted October 29, 2014 Marchionne thinks Ferrari is worth $7 billion. Implicitly, that means that the market is valuing the rest of Fiat @ $5 billion. Given that Chrysler on it's own is worth somewhere between $24 and $36 billion, it's possible that he's separating out the easy to value assets to provide a buying opportunity on the residual. Also, if he's looking to pull a John Malone and hedge out the dilution from the mandatory convertible securities, this would probably be the way to go. Link to comment Share on other sites More sharing options...
merkhet Posted October 29, 2014 Share Posted October 29, 2014 I don't understand why they would do this though....Ferrari and Maserati are the crown jewels of Fiat and Ferrari would probably be better housed inside a larger manu...what benefit could there be to separating them? They are only floating 10% right? My guess is this is just a way to get the market to recognize the full value of Ferrari embedded in the rest of FCA. That will lift FCA equity price, and perhaps make additional financing down the road easier. They're actually spinning off the other 90% to shareholders. Link to comment Share on other sites More sharing options...
fareastwarriors Posted October 29, 2014 Share Posted October 29, 2014 Fiat Chrysler Plans Ferrari IPO Announcement Comes Weeks After Departure of Luxury-Car Brand’s Chairman http://online.wsj.com/articles/fiat-chrysler-plans-ferrari-ipo-1414588494?mod=WSJ_hp_LEFTWhatsNewsCollection Link to comment Share on other sites More sharing options...
goldfinger Posted October 29, 2014 Share Posted October 29, 2014 Marchionne thinks Ferrari is worth $7 billion. Implicitly, that means that the market is valuing the rest of Fiat @ $5 billion. He thinks it is worth 7-10B Euros! http://www.businessinsider.com/r-marchionne-upbeat-on-landmark-fiat-chrysler-listing-2014-10#ixzz3F8FEls6J And Fiat Chrysler owns 90% of Ferrari. Link to comment Share on other sites More sharing options...
phil_Buffett Posted October 29, 2014 Share Posted October 29, 2014 last Weekend i changed my Profile Picture here. and today we get the info that we receive ferrari Shares. how nice is that? i love it!!!! :) Now you can change the picture to Maserati :) :D i had before my ferrari Pic, a pic of a granturismo at the board. but the ferrari works way better ;D merkhet said it already. they want to Highlight the immense value of the whole fiat Group. with this spinoff they are showing fiat is not only bad Little fiat from italy with small cars. we are also ferrari and maserati and so on. ferrari is a awesome brand. i love it. the Shares will rise and Sergio once again creates value for us. Link to comment Share on other sites More sharing options...
Palantir Posted October 29, 2014 Share Posted October 29, 2014 But why do they need to highlight this value? They could just wait until they have more cash and repurchase stock right if it was truly undervalued? It seems like this might just be a short term rise. Link to comment Share on other sites More sharing options...
merkhet Posted October 29, 2014 Share Posted October 29, 2014 Marchionne thinks Ferrari is worth $7 billion. Implicitly, that means that the market is valuing the rest of Fiat @ $5 billion. He thinks it is worth 7-10B Euros! http://www.businessinsider.com/r-marchionne-upbeat-on-landmark-fiat-chrysler-listing-2014-10#ixzz3F8FEls6J And Fiat Chrysler owns 90% of Ferrari. My mistake. You're right. He thinks it's worth 7 to 10 billion euros. (A separate Reuters article says that it might be worth 5 to 6 billion Euros.) In any case, if Ferrari is distributed at roughly fair value, the play is to plow money back into Fiat. Link to comment Share on other sites More sharing options...
phil_Buffett Posted October 29, 2014 Share Posted October 29, 2014 the market hates fiat and would never realise and reward it. i think a spinoff is a nice Thing. the ferrari stock could rise very nice. and so as a fiat shareholder i have Long term more Money. Link to comment Share on other sites More sharing options...
wachtwoord Posted October 29, 2014 Share Posted October 29, 2014 I don't understand why they would do this though....Ferrari and Maserati are the crown jewels of Fiat and Ferrari would probably be better housed inside a larger manu...what benefit could there be to separating them? This. Does anyone have a clue why they are doing this besides trying to boos the share price short term? Link to comment Share on other sites More sharing options...
jay21 Posted October 29, 2014 Share Posted October 29, 2014 I don't understand why they would do this though....Ferrari and Maserati are the crown jewels of Fiat and Ferrari would probably be better housed inside a larger manu...what benefit could there be to separating them? This. Does anyone have a clue why they are doing this besides trying to boos the share price short term? It will offset dilution. I want my share price to be high when I issue shares and converts, not low. Although, as someone pointed out dilution might be low so Im not entirely sure. Link to comment Share on other sites More sharing options...
LC Posted October 29, 2014 Author Share Posted October 29, 2014 I agree jay. Also remember they're NYSE listed now and want US funding. Showing the US market that they are willing to play fair is a step in that direction. The market wants Ferrari, Fiat wants funding on good terms. Link to comment Share on other sites More sharing options...
wbr Posted October 29, 2014 Share Posted October 29, 2014 The IPO and spinoff makes a lot of sense: - FCA gets some cash to finance their expansion from the IPO (alternatives would be dilutive or costly) - A spinoff makes sense when the whole business based on a SOTP valuation is very undervalued. Your FCA shares + the Ferrari spinoff shares might be worth much more than the current FCA share price - Ferrari is a high quality business that offers better profitability and less cyclical sales (limited production, long waiting list) and is also a stock that Ferrari enthusiasts might buy without a financial motive. This value of Ferrari cannot be recognised inside FCA which leads to the low SOTP value mentioned above. Link to comment Share on other sites More sharing options...
muscleman Posted October 29, 2014 Share Posted October 29, 2014 I am glad Sergio Marchionne is not Eddie Lampert. Otherwise he would do a rights offering of Ferrari instead of spin off. :D Link to comment Share on other sites More sharing options...
MYDemaray Posted October 29, 2014 Share Posted October 29, 2014 Also adds some intrigue around the rumors that VW has wanted Ferrari... Link to comment Share on other sites More sharing options...
fareastwarriors Posted October 29, 2014 Share Posted October 29, 2014 I can totally see another Big Auto Co buying Ferrari once it's public. It would make a wonderful addition to any portfolio... Link to comment Share on other sites More sharing options...
merkhet Posted October 29, 2014 Share Posted October 29, 2014 I'm wondering if the two-year bar would still apply to the tax-free nature of a spin. Link to comment Share on other sites More sharing options...
Sportgamma Posted October 29, 2014 Share Posted October 29, 2014 So, they have recently bought a bunch of shares from the rights offering which they will have to sell and float on the US market. Volume there is still slow compared to Milan. But in between they announce their intention to spin of Ferrari and all of a sudden the market accounts for that. I´m not so sure they will spin it off. Link to comment Share on other sites More sharing options...
nikhil25 Posted October 29, 2014 Share Posted October 29, 2014 Interesting perspective from a member on the Ferrari Chat Forum: http://www.ferrarichat.com/forum/ferrari-discussion-not-model-specific-sponsored-algar-ferrari/466064-fiat-spin-off-ferrari-2.html From the perspective of Ferrari owners, the issuance of 10% of the shares is essentially meaningless. This was simply done to set a market price for the 90% of shares to be spun off to the shareholders. The REAL ISSUE is the issuance of $2.5 billion of convertible bonds, the proceeds of which will go to Fiat. Unless and until those bonds convert, Ferrari's cash flow is largely going to be dedicated to paying the interest on those bonds instead of developing its street cars and its racing program. EDIT: My bad - misinterpreted it. Please ignore! Link to comment Share on other sites More sharing options...
muscleman Posted October 29, 2014 Share Posted October 29, 2014 Interesting perspective from a member on the Ferrari Chat Forum: http://www.ferrarichat.com/forum/ferrari-discussion-not-model-specific-sponsored-algar-ferrari/466064-fiat-spin-off-ferrari-2.html From the perspective of Ferrari owners, the issuance of 10% of the shares is essentially meaningless. This was simply done to set a market price for the 90% of shares to be spun off to the shareholders. The REAL ISSUE is the issuance of $2.5 billion of convertible bonds, the proceeds of which will go to Fiat. Unless and until those bonds convert, Ferrari's cash flow is largely going to be dedicated to paying the interest on those bonds instead of developing its street cars and its racing program. Why does this 2.5 bn bond have anything to do with Ferrari? If I read the annoucement correctly, it says the bond issuance is contingent upon the Ferrari spin off completion. Link to comment Share on other sites More sharing options...
muscleman Posted October 29, 2014 Share Posted October 29, 2014 I'm wondering if the two-year bar would still apply to the tax-free nature of a spin. What two-year bar? Link to comment Share on other sites More sharing options...
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