Ferrari files documents to sell stock to public
Ferrari believes it can grow profits while also protecting its exclusive heritage as it goes public.
Ferrari, a luxury brand that "transcends the automotive industry," filed the documents necessary Thursday to sell 10% of its shares to the public, setting in motion a process that Fiat Chrysler Automobiles CEO Sergio Marchoinne hopes to finish by the end of the year to unlock the value of the luxury sports car brand.
Marchionne wants to raise money from the sale of Ferrari stock to fund his ambitious, five-year plan to expand FCA globally into an automaker that sells 7 million cars and trucks annually.
Because of regulatory issues, Ferrari's public offering cannot occur until after Oct. 13, a year after Fiat Chrysler listed its shares on the New York Stock Exchange. Ferrari also plans to list its shares on the New York Stock Exchange. The company expects its separation from Fiat Chrysler Automobiles to completed early next year.
UBS Investment Bank, Bank of America Merrill Lynch and Banco Santander are acting as joint bookrunners for the offering and UBS Investment Bank is acting as global coordinator.
"We believe our history of excellence, technological innovation and defining style transcends the automotive industry, and is the foundation of the Ferrari brand and image," the company said in its registration statement, filed with the U.S. Securities and Exchange Commission.
The Maranello, Italy-based automaker plans to offer up to 10% of its stock to the public, distribute 80% of the stock to existing Fiat Chrysler shareholders and the remaining 10% will continue to be owned by Piero Lardi Ferrari, a son of the founder.
After the spinoff, Fiat Chrysler Automobiles will no longer have an ownership stake in Ferrari. However, Exor, an investment firm controlled by Fiat scion John Elkann, will. Elkann, the great-great-grandson of Fiat founder Giovanni Agnelli, is both the chairman of Fiat Chrysler and is the chairman of Exor.
After the public offering and the spinoff, Exor will own about 24% of Ferrari, according to today's filing. Marchionne also will serve as chairman of Ferrari.
Ferrari, founded in 1947 by Enzo Ferrari, is a car manufacturer unlike any other. The company makes about 7,200 cars per year, is embraced in Italy and around the world for its ongoing success in Formula 1 racing and is a powerful luxury brand.
And even though it only sells a small number of cars annually, Ferrari generated more than $3 billion in revenue last year and a profit of $423 million.
Marchionne previously said he believes Ferrari should be valued as a luxury brand and should be valued as high as $11 billion.
He has also said the company could increase its production to as many as 10,000 cars per year. Those plans have been criticized by some Ferrari enthusiasts who believe increasing production could diminish the brand's exclusivity.
In its prospectus, the automaker said exclusivity is at the core of its strategic plan.
"We pursue a low volume production strategy in order to maintain a reputation of exclusivity and scarcity among purchasers of our cars and deliberately monitor and maintain our production volumes and delivery wait-times to promote this reputation," the company said in the prospectus.
Still, Ferrari also said it plans to "selectively expand the presence of the Ferrari brand in attractive and growing lifestyle categories."
The company said it plans to expand the brand into sportswear, watches, accessories, consumer electronics and theme parks.
The company already operates the world's largest indoor theme park called "Ferrari World Abu Dhabi," in Abu Dhabi.
"Ferrari is capable of being a fully fledged luxury brand, and as such, it would occupy a space in the luxury goods sector, which is — which shares its name with Ferrari and maintains the same level of attachment to exclusivity," Marchionne said in January. "The intention here is to develop a business that is fully fledged on its own merits, that can be compared to other luxury goods-makers outside of carmaking."
It's likely that Ferrari's shares will be highly sought after when they hit the market before the end of this year.
"We think the filing of the Ferrari IPO prospectus shows the continued commitment by a management and board who are actively pursuing various avenues to maximize value at the Company (Fiat)," said Adam Wyden, managing member of ADW Capital Management, a hedge fund in New York. "We are extremely excited about the opportunities that Sergio and John have at their fingertips with this iconic brand."
Follow Detroit Free Press reporter Brent Snavely on Twitter @BrentSnavely.