DECEMBER 11, 2002
Ferrari future clouded by Fiat merger plan
The Italian industrial company Fiat is in trouble with creditors pressuring the company to find a solution to the problem of Fiat Auto, the automobile company which is currently losing money at a vast rate. Union problems and Italian labour laws mean that the company is not allowed to restructure as it wishes to do and the main company is slipping into difficulties as a result.
Ferrari (and its sister company Maserati) are owned by another Fiat subsidiary but they are valuable assets and some of the Fiat shareholders want to see their value combined with Fiat's most successful brand Alfa Romeo to form a new luxury car company to keep the Fiat name in the automobile business. Fiat can sell its other automobile businesses to General Motors in 2004, although the American giant may challenge the deal that was agreed several years ago if Alfa Romeo is not part of the sale.
The plan to create a new Ferrari-Maserati-Alfa Romeo business is being linked to the huge German company Volkswagen, which would take a 49% stake in the company. If this was the case Fiat would no longer have control of the company because the Ferrari family already own 10% of the shares and Italian banks own another 34%. The banks would almost certainly trade in their shares but if VW held 49% of the business, Fiat could only keep 41% - unless the Ferrari family was bought out. And that would cost about $200m.
Such a move would put Ferrari under the influence of Volkswagen, a curious move in that the German company has aspirations to challenge Ferrari in the supercar market with its Lamborghini and Bugatti brands and has invested heavily to build up the two firms.
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