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FIAT SHAREHOLDERS OK SPIN-OFF; MORE VALUE IN TRUCKS THAN FERRARIS?

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FIAT SHAREHOLDERS OK SPIN-OFF; MORE VALUE IN TRUCKS THAN FERRARIS?

By Andrew Ganz

Fiat's investors have approved CEO Sergio Marchionne's plan to spin off Fiat Industrial SpA, the company's commercial and industrial arm. The move, analysts say, could benefit the soon-to-be-newly-independent truck arm more than the company's car-building sector.

"Fiat Industrial is undervalued by investors and will benefit from a recovery of the capital goods market,” Gabriele Gambarova of Banca Akros SpA, told Bloomberg. Gambarova is the top ranked Fiat analysts, according to Bloomberg.

“Investors will be more cautious on Fiat auto, which will have to invest to complete its commercial offer.”

Fiat Auto will include all of the company's consumer-oriented vehicles, including those marketed as Fiats, Alfa Romeos, Lancias, Maseratis and Ferraris. Fiat auto will retain a 20 percent share in Chrysler.

Fiat Industrial is set to begin trading on Milan's Borsa Italiana exchange early next year, likely at 8.38 euros per share - close to 50 percent more than the 5.64 euros per share analysts estimate for the "new" Fiat SpA car-building arm.

Still, Fiat - as a combined interest - has risen 34 percent since acquiring 20 percent of Chrysler last year. Despite what sounds like promising news for Fiat, the automaker is still among the lowest-performing automotive shares traded worldwide.

Chrysler is targeting an IPO in the United States for the second half of 2011.

“The success of Marchionne’s strategy with Chrysler is vital for the long-term perspective of the auto unit,” said Gambarova.

Fiat will split its debt between its automotive and industrial arms, each now responsible for about 2.5 billion euros. Fiat Industrial will receive about 1 billion in bilateral credit lines, 2 billion in outstanding bonds and 3 billion in cash, while Fiat (Autos) SpA will receive 10 billion in cash and 9 billion in outstanding bonds.

link:

http://www.leftlanenews.com/fiat-shareholders-ok-spin-off-more-value-in-trucks-than-ferraris.html

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