SEPTEMBER 14, 2006
Fiat confirms Ferrari buy-back
Fiat has confirmed that it is in the process of spending around $800m to buy back 29% of Ferrari. Fiat chief executive Sergio Marchione says that he hopes to have the deal completed by the end of the month. If that happens Fiat will own 83% of the business, with 10% in the hands of the Ferrari Family, five percent owned by Abu Dhabi's Mubadala Development company, which is also an important shareholder in the Spyker company, which is in the process of buying into the Midland F1 team. It is not clear who will own the remaining two percent but it may be a bank. The move suggests that Fiat's plans to float the Ferrari company will be delayed, possibly indefinitely, as Fiat has concluded that owning Ferrari has an important value.
Ferrari is still looking at ways in which it can increase its revenues without diluting the exclusivity of the brand. Much work is going into merchandising at the moment but the firm will probably look at other automotive ideas, having lost money on its investment in Maserati. The problem, it seems, was that Maserati was pitched at a far too competitive market and it may be that Ferrari needs to rethink its strategy if it is going to try the same thing again with a different brand.
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