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Ferrari's top executive was surprised and angered by Fiat SpA's decision to sell 34 percent of the sports car maker. The deal means Fiat won't go through with its plan to sell a stake in Ferrari on the stock market this year. It will also cost top Ferrari executives a lot of money. Ferrari President Luca di Montezemolo said he knew nothing about the change in plans until they surfaced in the Italian press. The final details of the initial public offering were scheduled to be settled at a Ferrari board meeting on July 8. Instead, Fiat will sell the 34 percent stake to a consortium led by Italian bank Mediobanca for €775.2 million. The cash will save Fiat's second quarter results and help it achieve its goal of more than halving net debt to €3 billion this year. But Ferrari insiders said they were shocked by the news. They had been working around the clock to prepare the IPO. In late May, three banks were retained to handle the deal. "He [di Montezemolo] is running the company, but he knew nothing about it," said a source close to the company. Di Montezemolo even let his anger boil over in public. At a press conference last week, he said: "I was told when the deal was done and I was displeased, not about the deal itself but because I was told about it afterwards." But the longtime Ferrari chief executive said he welcomes Mediobanca as a shareholder and was "happy to be able to help Fiat." Ferrari's top executives and its senior racing team officials counted on receiving lucrative stock options as part of the previous IPO package. But in a brief interview, di Montezemolo said that no stock options would be paid out as part of the Mediobanca deal, leaving executives and managers "very upset." In addition, Ferrari was due to realize a capital increase under the previous plan. Funds were to be used to finance growth at Ferrari and Maserati, which is controlled by Ferrari SpA. But di Montezemolo said that plan will be reconsidered under the Mediobanca deal. Fiat group decided it needed the proceeds from Ferrari now, not later. The influx gave Fiat group a net balance-sheet gain of around €617 million by June 30. The sum is expected to allow Fiat group to close the second quarter in the black, after two quarters in the red, and to begin reducing its net debt, which had risen 10 percent to €6.6 billion by March 31, 2002. Fiat announced in May that it would float a minority stake in Ferrari by year-end, planning to raise €750 million. Fiat group owns 90 percent of Ferrari, with the remaining 10 percent controlled by Piero Ferrari, the only surviving son of the company founder Enzo. Ferrari had appointed two Italian banks, UniCredito Italiano and Caboto-IntesaBCI, and Germany's Deutsche Bank to handle the IPO. Mediobanca will be the only advisor in an IPO of the 34 percent stake that is scheduled to take place by June 2003. Fiat could give Mediobanca a one-year extension. According to bankers, Ferrari could be valued at around €2 billion in good market conditions, but in the current depressed market a sale this year could have reduced the value to €1.5 million to €1.8 billion. With its offer of €775.2 million for a 34 percent stake, Mediobanca
valued Ferrari at €2.4 billion before a €120 million dividend
payout, the two companies said in a joint statement. Click here to return to the Ferrari Happenings page.
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