The Financial Times published this article on 26 June 2002, written by Fred Kapner:

Fiat, the ailing industrial group, is weighing an offer from investment bank Mediobanca to acquire 35 per cent of sports car maker Ferrari for around €840m ($817m), people familiar with the group said yesterday.

Fiat had planned on an initial public offering for Ferrari later this year as part of a broader cash-raising and restructuring effort to slash its €35.6bn debt burden.

Mediobanca would acquire the stake and then float it on the stock market next year, people familiar with the plan said.

Mediobanca is seeking institutional investors which would acquire part of the 35 per cent stake. It already has commitments for one-third of that stake.

The transaction, if completed, would give Fiat cash far sooner than it had expected had an IPO taken place in November. In addition, the offer values Ferrari at around €2.5bn, far higher than the €1.5bn-€2bn most analysts expected Ferrari to fetch.

For Mediobanca, Italy's once-dominant investment and merchant bank, the deal would renew ties with Fiat that had been deeply frayed in recent years after decades of close co-operation.

Mediobanca would recuperate part of the cost of its purchase through commissions from the IPO, and could also muscle in on other asset sales which Fiat plans for the next three years. Fiat's three main creditor banks - Banca di Roma, IntesaBCI and Sanpaolo IMI - had counted on managing the sale of the assets as part of their agreement last month with Fiat to restructure the group's debt.

Fiat earlier this month selected Deutsche Bank, IntesaBCI and UniCredito Italiano to manage Ferrari's IPO. By directly acquiring a large stake of Ferrari, however, Mediobanca would take away IPO commissions from those banks.

"It's a clever, if possibly expensive, move, if it works. But Mediobanca has to find other partners for this deal to go through, and investors are a bit worried about the high price," one person said.

Ferrari last year had sales of €1.04bn and a net profit of €47m, but it expects to greatly increase both this year thanks to the introduction in the US of its Maserati sports cars.

Maserati, which had stopped selling cars there in the early 1990s, now aims to sell 1,200 vehicles in the US at between $85,500 and $95,500. Worldwide, Maserati expects to double sales to 3,500 units largely thanks to the roll-out of its Spyder two-seat convertible.

Fiat had originally hoped to float Ferrari in 2003 after the group had established a stronger sales record for Maserati in the US and after presumably increasing net profit this year.

It agreed to speed up the offering under pressure from its creditor banks.

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