Mediobanca sees enlarged Ferrari with more brands
MILAN/ROME, July 9 Reuters is reporting that investment bank Mediobanca , a key shareholder in Fiat's Ferrari sportscar unit, sees an "enlarged Ferrari" that would include the Alfa and Maserati luxury brands, while Fiat (Milan:FIA.MI - News) would sell Fiat Auto unit, financial and political sources said on Tuesday.
"The idea is to convince Turin (where Fiat is based) to sell Fiat Auto and to keep hold of Alfa and Maserati, putting the two brands, which are improving, under the control of Maranello," a financial source told Reuters.
Maranello is the headquarters of Ferrari.
Mediobanca, which on June 30 spent 775.2 million euros on a 34 percent stake in Ferrari, favours this scenario, the financial source said.
There has been growing market speculation that Fiat would sell Fiat Auto to U.S. partner General Motors Corp., which owns 20 percent of Fiat Auto and has an option to buy the remaining 80 percent beginning in 2004.
"It is not yet decided whether Fiat will sell the car business," one government source said.
"If we receive guarantees from the Agnelli family that they don't intend to sell the car division, the government is ready to guarantee incentives to develop electric and ecologically friendly cars."
Industry Minister Antonio Marzano said on Monday that Fiat, which is controlled by the Agnelli family, had assured the Italian government that it does not plan to sell loss-making Fiat Auto.
A deep drop in Fiat's car sales is gnawing at its bottom line, dragging the industrial group to a 529 million euro ($487.1 million) net loss in the first quarter of the year.
The poor results have forced Fiat into a financial rescue package with banks, which, sources say, favour the carmaker's sale.
The Mediobanca plan, which could find favour with Fiat management but run into problems with the creditor banks, is already being debated in Rome.
"The hypothesis has already reached Rome, splitting the government," a political source said.
GOVERNMENT SPLIT
On one side are those who are potentially in agreement with Mediobanca: notably Economy Minister Giulio Tremonti and Treasury Director General Domenico Siniscalco.
On the other: Industry Minister Antonio Marzano and European Affairs Minister Rocco Buttiglione.
Outside the government, Bank of Italy Governor Antonio Fazio and Cesare Geronzi, the chairman of bank Capitalia (Milan:CPTA.MI - News), are raising their hands against Mediobanca.
The government is worried that if foreigners were to take over the car company, they would close Fiat's Italian factories and shift production to countries with lower labour costs.
"Starting from now, Fiat could close the gap and in around 10 years present itself as a market leader," one ministerial source said, adding it was a medium-term investment.
As a further carrot to keep Fiat Auto Italian, the government might drop long-standing objections to France's EdF taking a bigger stake in Italenergia.
Italy's government last year moved to restrict EdF's voting rights in Italenergia to two percent despite it owning 18 percent of the holding in response to France's slow progress in opening up its power markets, which are dominated by EdF.
Fiat, seeking to raise cash and cut debts, last week agreed to sell a 14 percent stake in Italenergia for 576 million euros to Italian creditor banks, with a view to buying the stake back in 2005 if it has sorted out its financial problems by then.
The eventual sale would leave Fiat with 24.6 percent in Italenergia. Edf has an option to buy this stake in 2005.
After the Ferrari deal, Mediobanca has strengthened its ties with the Agnelli family, particularly Umberto Agnelli -- younger brother of family patriarch and Fiat Honorary Chairman Gianni Agnelli -- who appears to play an increasing part in the group's decision-making, the financial source said.
The financial source added that Mediobanca is now studying "a number of other portfolios, starting with Teksid and Comau," two units that Fiat has said it wants to sell.