Stock Spinoffs

Fiat Chrysler Shareholders Approve Ferrari Demerger

Less than two months after its successful IPO of 10% of Ferrari(RACE), Fiat Chrysler(FCAU) took a major step forward towards the spinoff of its remaining 80% stake yesterday. At the company’s Extraordinary General Meeting of shareholders, the transaction was approved.  It is expected that the company will complete the spinoff in January 2016.

The EGM approved a demerger pursuant to which FCA will transfer all of the shares held by it in Ferrari N.V. to FE Interim B.V., a newly-formed Dutch company, and FE Interim B.V. will issue shares to FCA’s shareholders (“Demerger“). The Demerger is part of a series of transactions that will be carried out to separate FCA’s ownership interest in Ferrari N.V. and distribute that ownership interest to holders of FCA shares and mandatory convertible securities. Those transactions are expected to be carried out in early January 2016

Ferrari stock is down over 10% since we shared Barron’s warning that the stock was overvalued on November 4.  Buyers should be aware that the huge increase in float post-spin could create additional downward pressure.

Disclosure: The author holds no shares in any stock mentioned

 

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