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JULY 27, 2005

Abu Dhabi buys Ferrari share

The Mubadala Development Company - which is wholly owned by the Government of Abu Dhabi - has announced the purchase of a five percent stake in Ferrari from Mediobanca for $137m. The deal values Ferrari at $2.75bn. Mediobanca will get paid more if Ferrari is floated on the stock exchange in the course of the next two years.

The deal does not change the shareholdings in Ferrari with Fiat continuing to hold 56% of the company. Ferrari is hoping that the move will increase sales in the Middle East and North Africa with plans for the creation and development of road and racing car testing initiatives, along with professional driving schools in the Middle East. The figures are surprising in that when Mediobanca bought 34% of the shares for $768m in July 2002 the company was valued at $2.25bn and still included the Maserati brand in which a great deal of money had been invested to build up the company as Ferrari sales were restricted in order not to affect the exclusivity of the Ferrari brand. Maserati was later transferred to Alfa Romeo but no details of that deal have been published. In other words, Mubadala is paying more for less and valuing Ferrari much more than previously. At the time of the Mediobanco deal analysts reckoned that Ferrari was overpriced and the new deal must add to that belief.