Ferrari IPO Will Price At Top End, The Stock Is Oversubscribed
$RACE, $FCAU
Ferrari will be valued at as much as $10-B in a IPO initial public offering when owner Fiat Chrysler Automobiles NV (NYSE:FCAU) sells a 9% stake in the Italian supercar manufacturer.
The sale will consist of 17.2-M shares of Dutch holding company Ferrari NV at 48 to 52 each, according to a filing with the US Securities and Exchange Commission (SEC) late Friday.
The shares will trade on the NYSE under the ticker “RACE”, and not “FRRI” as has been reported prior.
The IPO and full spinoff of Ferrari are part of Fiat Chrysler CEO Sergio Marchionne’s effort to raise funding to cut the parent company’s debt and help finance a $54.5-B investment program that focuses on expanding the Jeep, Alfa Romeo and Maserati brands globally.
As part of its separation from Fiat, Ferrari will take on EUR 2.8-B in debt from the company, the filing shows, and subsequently issue a projected EUR 2.128-B in debt to 3rd parties. Including that debt, Ferrari will have an enterprise value of about $12.0-B.
That is in line with the minimum $11.4-B that CEO Marchionne, who’s also Ferrari Chairman estimates is appropriate for a brand he contends should be treated more like a luxury-goods maker than an auto manufacturer.
CEO Piero Ferrari, the son of the founder Enzo Ferrari, gets a cash payment of ERU 280-M as part of the transaction. He will keep a 10% stake after the separation of Ferrari from Fiat Chrysler.
The NYSE stock sale is set to be oversubscribed, as initial requests for Ferrari shares look exceed the amount available by more than 10X, one of the people said.
Ferrari’s EBITA (earnings before interest and taxes) last year amounted to EUR389-M on EUR2.8-B of revenue as the company delivered 7,255 of its iconic supercars.
The Maranello, Italy-based manufacturer, which seeks to limit the number of vehicles it makes to slightly less than demand to maintain exclusivity, said in a filing last month that it plans to raise production to 9,000 vehicles by Y 2019.
Ferrari will stick to producing high-end sports cars, and will follow rivals into models such as SUV’s ( sport utility vehicles) or EV’s (electric vehicles) as powerful vehicles with traditional roaring engines are part of what customers pay for, CEO Amedeo Felisa said last month.
The carmaker will fully separate from Fiat Chrysler at the beginning of next year as the London-based parent distributes its remaining 80% to shareholders.
The Dutch holding company structure adopted by the supercar business replicates a strategy CEO Marchionne used to create Fiat Chrysler and tractor maker CNH Industrial NV.
It also includes a loyalty-ownership setup which will help the Agnelli Family, the dominant shareholder in Fiat Chrysler, to keep voting control of Ferrari.
UBS AG, Bank of America Corp.’s Merrill Lynch, Banco Santander SA, Mediobanca SpA and JPMorgan Chase & Co. are advising on the IPO.
The underwriters will have an option to buy an additional 1.7-M shares to cover over allotments, Friday’s filing shows.
Have a terrific weekend.
Paul Ebeling
HeffX-LTN
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