Fiat’s Elkann eyes spin-off of car division
By Guy Dinmore in Rome
Fiat is expected to unveil plans to spin off the group’s core car division at the presentation of a five-year strategy in Turin on Wednesday.
The move comes after the announcement on Tuesday that John Elkann, 34, will be the latest representative of the company’s controlling Agnelli family shareholders to become chairman of the Italian group.
Mr Elkann is also head of Exor, the family’s holding company that controls 30 per cent of Fiat and is bidding for the private banking arm of Belgium’s KBC.
Mr Elkann’s elevation from vice-chairman is intended to strengthen the partnership with Sergio Marchionne, chief executive, who remains in charge of day-to-day management and will spearhead Fiat’s new strategy.
Luca Cordero di Montezemolo, at a joint press conference with Mr Elkann at Fiat’s headquarters in Turin, announced his resignation as chairman, declaring: “My role as helmsman is over.”
In spite of his denials – repeated on Tuesday – Mr Montezemolo’s departure from Fiat after six years has fuelled speculation that he intends to enter politics as Italy looks to the day when Silvio Berlusconi, the 73-year-old prime minister, decides to step aside.
Shares in Fiat rose by 9 per cent on expectations that Mr Marchionne would lay out plans to spin off the autos division from its other industrial businesses, probably in conjunction with a planned initial public offer of Chrysler, the US carmaker in which Fiat owns a 20 per cent stake.
“[Mr] Elkann wants to see this plan through,” a source close to Fiat said.
Exor’s minority controlling stake in Fiat would be reduced if Fiat was successful in exercising its option to increase its stake in Chrysler and then merge it with Fiat Auto.
Mr Marchionne declined to comment on what he intends to say on Wednesday on the future of Fiat Auto.
Mr Marchionne presented a five-year business plan for Chrysler last November, in which he promised to roughly double the US automaker’s sales to 2.8m units and deliver an operating profit of $5bn by 2014.
Fiat’s chief and his deputies will outline strategic and profitability targets for the group’s individual business units, which also include Iveco trucks, the farm and construction-equipment producer Case New Holland, and the Ferrari and Maserati luxury car brands.
“We expect that he will move forward with a carve-out of Fiat Auto and a combination with Chrysler, although the time horizon and mechanics are uncertain,” said Adam Jonas of Morgan Stanley.