Fiat and Ferrari

["Nick Koleszar" <npk@domain.elided>]

From http://www.grandprix.com/ns/ns06177.html

IN the last few days there have been attempts in the Formula 1 paddock to
raise fears about the financial stability of Ferrari. These seem to be part
of the ongoing political battles over money, but it is not clear who is
spreading them. The gist of the argument is that Fiat Auto Holdings is in
trouble. It has debts of $6bn and its cars are not doing well in the
European markets because of strong French and German products. Despite
attempts to restructure the business the results have not been very
successful and members of the Fiat management are now considering a deal
which will solve the problem but which will mean that Fiat pulls out of
car-making, the industry on which it was founded.

The possibility to do this is thanks to a deal that Fiat has with General
Motors. A couple of years ago GM agreed to swap 5.1% of its equity for a
$20% shareholding in Fiat Auto Holdings and an option to buy the whole
company. The deal was intended to help both companies cut costs by pooling
certain resources.

The option to buy the rest of the company for "a fair market value" can be
actioned as early as July 2004 and that would mean that GM would take over
Fiat Auto Holdings and its automobile brands.

Unfortunately for those spreading the rumors the story does not make sense
because Fiat Auto Holdings does not control Ferrari. This is owned directly
by the main Fiat company which is controlled by the Agnelli Family via a
complicated series of holding companies. If Fiat did decide to sell Fiat
Auto Holdings to GM, Fiat itself would have a great deal more cash and would
probably be even more inclined to support Ferrari. There are plans for
Ferrari to be floated but Gianni Agnelli says that the Agnelli Family will
retain control of the company whatever happens. The Agnellis own 87% of
Ferrari. The rest is held by Piero Ferrari (Enzo's son who has 10%) and a
group of banks which own 3% of the business.

In the last few days the Agnellis have asked Fiat shareholders to confirm
Fiat chairman Paolo Fresco and chief executive Paolo Cantarella for new
three year terms. It is worth noting that there were no GM representatives
at the Fiat Auto annual shareholders meeting last week.

Nick Koleszar   koleszar@domain.elided
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1971 Alfa Romeo Giulia Super 2.0
1990 Alfa Romeo 75 3.0 QV
1993 Mini
1990-ish Rotax 125cc/Gbox kart
1926 Amilcar C6 (I wish....)
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