MILAN (Bloomberg) -- The real winners in Fiat Chrysler Automobiles' Ferrari spinoff are Chairman John Elkann and the Agnelli Italian industrial clan he represents, who will be the biggest shareholders of both companies.
The structure of the spinoff, with 80 percent of Ferrari shares going to FCA's existing shareholders, means the family will own about a quarter of the supercar maker. Ferrari may be worth around 9 billion euros ($11.5 billion), which would value the share held by Exor, the Agnelli family’s holding company, at about 2.25 billion euros, according to Milan-based analysts at Mediobanca.
It's another piece in an expanding empire. After sitting atop Fiat for 115 years, the Agnelli family reached across the Atlantic earlier this year to gain full control of Chrysler Group. That deal and Wednesday’s moves were orchestrated by CEO Sergio Marchionne who has spent a decade restructuring the Fiat carmaking group.
Elkann, the 38-year-old grandson of Gianni Agnelli, plucked the CEO out of relative obscurity in one of his first moves as head of the company’s founding family.
“Marchionne did another financial miracle for the Agnelli family,” said Giuseppe Berta, a professor at Bocconi University in Milan and former head of Fiat’s archives. “John is benefiting the most as he gets direct grip on Ferrari and sees his assets reevaluated.”
Elkann has led the family’s involvement in the Exor investment company since 2004. Exor owns slightly more than 30 percent of FCA, a stake that has risen in value by about 25 percent, or about $800 million, since the joint company’s Oct. 13 debut in New York trading. Some 100 Agnelli family members own about 51 percent of Exor, and Elkann and his brothers hold the biggest stake.
With the likely backing of Piero Ferrari, the son of Ferrari founder Enzo Ferrari, who owns 10 percent of the supercar unit and is an Agnelli ally, Exor plans to lead a “new phase of development” for the company, the group said in a statement on Wednesday. Together, they will control 35 percent of Ferrari; Marchionne will remain the new company’s chairman.
To ensure its holding isn’t diluted, Exor also said it would invest about 600 million euros in the $2.5 billion mandatory convertible bond FCA also announced on Wednesday.
Elkann has signaled that this won’t be his last expansion move. He said in May that Exor is looking for one or two major service-industry investments after disposing of a stake in production inspector SGS SA last year.
After the Ferrari move, Elkann could create a “national champion of Italian luxury companies,” said Giuliano Noci, a marketing professor at Milan Polytechnic. “Maserati and a revamped Alfa Romeo could join Ferrari.”
Maserati and Alfa Romeo are to stay with FCA and will form the cornerstone of Marchionne’s plan to boost FCA’s profits with high-margin upscale products.
Exor’s 9.1 billion euros in net assets as of June 30 included stakes in Fiat’s truck and tractor affiliate CNH Industrial Global NV, real-estate company Cushman & Wakefield Inc., the Juventus soccer club and The Economist magazine.
Reduced Europe dependence
Since taking over the family’s responsibility for Exor, Elkann has reduced its dependence on Europe, which now accounts for less than a third of Exor’s revenue, compared with 75 percent in 2004. He also boosted its value more than fourfold.
“Our drivers are to be simpler, global, financially independent,” Elkann said in an interview last month. “We will be driven by opportunity to do another big investment.”
Tall, thin and deliberate, a sailor and soccer player with a boyish smile, the executive cuts a different figure than his grandfather. The swashbuckling legend of European society pages built Fiat into Italy’s biggest manufacturer and is still known to virtually everyone in the country as “L’Avvocato,” or The Lawyer, more than a decade after his death.
Appointed to Fiat’s board at just 21 years old, Elkann was groomed at a young age to take over the family business, including stints working anonymously on factory lines in Poland and the UK. Still, he was selected in part because there were few other options, and the beginning of his leadership was tinged with tragedy after the deaths of Gianni’s only son Edoardo and Umberto Agnelli, Elkann’s great-uncle.
“I’m proud of our history, but I wouldn’t say I feel any weight,” Elkann said. “I feel a responsibility.”