/Ferrari Goes Public, Sort Of

Ferrari Goes Public, Sort Of

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When Sergio Marchionne took helm at Ferrari as the replacement for Luca di Montezemolo he promised not to mess with the brand’s DNA. He said nothing about its integrity though, and so in his first big decision he is going to separate Ferrari from mother company Fiat.

Now, that is not necessarily a bad thing as they are going to offer up to 10 percent of Ferrari’s shares for sale in U.S. and European exchange markets, and that will bring in a lot of money for the company. The motivation behind separating Ferrari from Fiat-Chrysler is, apparently, to enable the shareholders to “benefit from the substantial value inherent in this business” according to John Elkann, chairman of Fiat-Chrysler. They also believe it is in Ferrari’s best interest not to be associated with the other brands in FCA.

Due to the exclusivity of the brand and the fact that they always keep demand higher than supply, Ferrari is one of only a handful of car makers enjoying a hugely profitable business. In recent years they consistently had to increase the production volume in order to keep their waiting list under control. Fiat-Chrylser is going to retain 90 percent of Ferrari’s shares and distribute them among FCA shareholders, because they don’t want to lose their most lucrative brand, especially as other divisions of the alliance are doing so well.

Via CNN

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