While Fiat Chrysler Automobiles [NYSE:FCAU] CEO Sergio Marchionne has been adamant that Alfa Romeo is not for sale, some industry analysts see the sale of Alfa Romeo along with fellow Italian brand Maserati as being entirely possible.
FCA’s share price was on the decline for much of 2016, with around $7 billion in debt no doubt weighing on investor minds. However, Forbes on Tuesday reported that several bigwigs in the investor world see some potential bright spots in FCA’s future and are changing their outlook for the company.
One is Berenberg Bank which sees Alfa Romeo, Maserati and supplier firm Magneti Marelli as potential spin-off candidates.
“Further asset divestments/spin-offs—Magneti Marelli, Maserati—have the potential to make FCA debt-free, which would re-rate the equity meaningfully,” Berenberg analyst Alexander Haissl said.
2018 Alfa Romeo Stelvio Quadrifoglio, 2016 Los Angeles Auto Show
Marchionne is due to retire in 2018 and has previously said that he wants to leave the company profitable and with little debt. However, it’s unlikely Alfa Romeo will be sold off given the recent launch of the Giulia and Stelvio models and significance of the cars’ Giorgio platform to fellow FCA brand Dodge—FCA is expected to use the Giorgio platform for redesigned versions of its Charger and Challenger muscle cars.
But Maserati is another story. FCA seems to be constantly delaying a redesigned GranTurismo as well as a sports car based on 2014’s Alfieri concept. And the low-voume nature of the Maserati brand will also limit its future profitability.
Haissl estimates that Maserati could bring in $3.6-$4.8 billion, enough to cover much of FCA’s debt. And he estimates that Magneti Marelli, which in the summer was reportedly close to being sold to Samsung, could bring a further $2.3-$3.7 billion.
Such moves are not without precedent at FCA. In 2015 the company spun off Ferrari [NYSE:RACE] and listed the brand on the New York Stock Exchange. Through the deal, FCA sold 10 percent of its 90 percent stake in Ferrari to the public while transferring the rest to its existing shareholders. (Enzo Ferrari’s son Piero maintained his own 10 percent stake.) FCA was also able to transfer some its debt to Ferrari via the deal.