Fiat may sell their auto parts division Magneti Marelli and a stake in Ferrari before consolidating Chrysler Group LLC, Chief Executive Officer Sergio Marchionne has said. Eric Hauser, a Credit Suisse analyst, says Marchionne “identified a Ferrari initial public offering and Magneti Marelli disposal” as possible sources of funds.
Marchionne was meeting analysts to explain the advantages of spinning off truck and tractor divisions to focus on carmaking. “We left Turin with the clear message that Fiat and Chrysler will become one company,” Morgan Stanley analyst Stuart Pearson wrote in a note. “A Ferrari initial public offering and potential Marelli disposal may need to come first, according to management,” said Pearson, who has an “overweight” rating on Fiat. Morgan Stanley added Fiat to its “best ideas” list today. Fiat, who acquired a 20% stake in Chrysler last year, have said they will raise the holding to 25% in 2011 and 35% in 2012. Marchionne plans to take the U.S. automaker public in the second half of 2011.
Magneti Marelli, whose products range from lighting to engine control systems, are aiming to expand in Russia, where they want to become “a leading player,” CEO Eugenio Razelli said last week, as the company opened a lighting plant in the country. “Magneti Marelli will be a much tougher asset to dispose of as 50% of sales are to Fiat,” says Credit Suisse’s Hauser.
