Fiat CEO Sergio Marchionne has revealed that Fiat will shortly repurchase most of the shares it sold in its Ferrari sportscar division to a consortium of banks in 2002. Fiat holds an option - valid until the end of June this year - allowing it to make the repurchase under terms set down during the original sale of the shares, and the news that it would take up the option had been widely expected by the markets with Fiat Group Chairman Luca di Montezemolo hinting as much earlier this month.

Fiat sold a 34 percent stake in its Ferrari arm during 2002 to a consortium of banks led by Mediobanca, who in turn passed the bulk of the shares onto other financial institutions including Commerzbank AG, Banca Popolare dell'Emilia Romagna and ABN Ambro Holding NV. As part of the agreement Fiat retained the option of repurchasing the entire stake for the original sale price of 775 million euros plus an undisclosed sum of interest before 30th June 2006. Mediobanca - who have made it clear in public comments they do not wish to hold a long term position in Ferrari any longer - last year sold a minority 5 percent stake to the Mubadala Development Company, a Government of Abu Dhabi-backed investment corporation for a price of 114 million euros, a deal which at the time valued Ferrari at 2.28 billion euros.
 

"Ferrari is strategic to the group," Forbes quoted Marchionne as saying yesterday, "we will get back the 29 pct which is in the hands of others," he added. Marchionne was referring explicitly to the 29 pct stake that Mediobanca and its consortium still hold, clearly implying that Fiat might not repurchase the 5 pct held by the Mubadala Development Corporation allowing them to become a longer-term investor in Ferrari. Fiat current hold a controlling 56 percent of Ferrari.

Marchionne said that discussions with Mediobanca on buying back the Ferrari shares are now at a 'very advanced' stage and the issue should be resolved prior to the 30th June deadline. Marchionne also added that any upward revisions to a projected full-year operating profit of 200 million euro for Fiat Auto would only be made once second quarter results had been analysed. Fiat also revealed that Marchionne had purchased 20,000 shares in the Fiat Group at a price of 9.385 euros each yesterday, while Montezemolo had purchased as similar number of share for 9.447 euros each.