Rumour: FCA considering spinning out Jeep & Ram into a separate company Fiat Chrysler Automobiles CEO, Sergio Marchionne, dropped a possible bombshell of an answer last Wednesday when he was asked if the automaker's Jeep and Ram brands, either together or separately, could be spun off into a separate, standalone company.
His answer - "Yes".
Although it seems like a remote possibility for now, Marchionne is not new to spinning off separate company entities out of the FCA organisation.
Back in 2011, he separated Fiat and Fiat Industrial (the Italian company's agricultural manufacturing division) into two companies. 6 years later, the now-renamed CNH Industrial has annual sales of more than $25 billion and is actively traded on the New York Stock Exchange.
A more recent story is the spinning-off of Ferrari into a standalone company last year, which has resulted in NYSE trading of Ferrari at more than $75 per share and which has resulted in generating more than $3.4 billion in annual revenue and close to $435 million in net income.
Speculation is rife that this is the first clear indication of FCA filing for possible bankruptcy in the future, if and when they decide to spin out Jeep & Ram as a separate, standalone company. Quote:
A spin-off of Ram and Jeep, if it happens, would not necessarily mean those brands would be cut off from the automaker. Marchionne remains chairman and CEO of Ferrari and is chairman of CNH Industrial. Exor, an investment fund whose chairman and CEO is John Elkann, owns 26.9% of CNH Industrial's shares and 22% of Ferrari's shares. Elkann is the great-grandson of Fiat founder Giovanni Agnelli.
Morgan Stanley's Adam Jonas, the analyst who asked Marchionne about spinning off Ram and Jeep, dropped the issue after one question and moved on to another topic. But it's not the first time that Jonas has explored the issue. In January, Jonas estimated that Jeep's value on a standalone basis would be $22 billion (about 20.3 billion euro), which was more than the market capitalization of Fiat Chrysler at the time. Jeep has been growing rapidly in recent years. Its sales have climbed from less than 500,000 in 2008 to more than 1.4 million last year.
Jonas also values Ram at $11.2 billion (about 10.3 billion euro), Maserati at $3.5 billion (roughly 3.2 billion euro), and parts and components divisions Magnetti Marelli and Teskid at $3.5 billion (about 3.2 billion euro).
Marchionne set a goal in 2014 for Jeep's annual sales to exceed 2 million SUVs annually by 2018, and the brand is on track to meet that goal, Fiat Chrysler Chief Financial Officer Richard Palmer said Wednesday.
| Detroit Free Press |