Industry News

Ferrari Set to Pay Fiat Chrysler $2.8 Billion Ahead of IPO Split

Because gaining independence isn't cheap.

Perhaps this is a key reason why former Ferrari CEO Luca de Montezemolo decided it was time to move on. Last month, Ferrari’s new CEO, Sergio Marchionne, announced plans to sell 10 percent of the Italian supercar builder in an effort to raise capital for Fiat Chrysler (FCA). The remaining 80 percent will be distributed to current FCA investors while the last 10 percent will belong to Ferrari Vice Chairman Piero Ferrari. Automotive News is now reporting that FCA estimates it’ll receive roughly $2.8 billion from Ferrari before the IPO spin off next year.

Essentially, Ferrari needs to pay up in order to break away. "Prior to the separation we also intend to enter into certain other transactions including distributions and transfers of cash from Ferrari currently estimated at 2.25 billion euros," stated FCA in a US regulator filing. Still a little confused as to what’s going on? Marchionne wants to not only fund future Fiat Chrysler models, but also to cut debt. Some of those said fund transfers could very likely include FCA transferring some of its debt to Ferrari. On the other hand, Ferrari will gain greater independence. Even it were to carry some of that debt, the brand is a long proven money-maker, and its overall finances won’t be harmed.

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