Fiat CEO Sergio Marchionne confirmed on Wednesday that the Turin group will buy back a stake in Ferrari from investment bank Mediobanca by the end of September, reports Italian news agency ANSA. "We will close (the deal) by the end of the month," said Marchionne, when quizzed by journalists on the sidelines of a visit to China by a delegation of top political and business leaders.

Fiat was forced to sell a 34% stake in the luxury car maker when it faced a cash crunch in 2002. Mediobanca acquired the stake as a condition to extend Fiat a major loan. But Fiat, whose chairman Luca Cordero di Montezemolo is also Ferrari chairman, has made no secret of its desire to get back as much of the ceded stock as it can. It currently holds 56%.

A Mediobanca spokesperson confirmed to ANSA that the investment bank now controls 29% of Ferrari stock. Last year it sold a 5% stake to Abu Dhabi's government-owned Mubadala Development Company. Marchionne has said Fiat will not seek to buy back the Ferrari shares held by Mubadala. Fiat initially considered listing Ferrari on the stock market but has now shelved the plan for an IPO because a strong turnaround at Fiat Auto, which has returned a profit for the past two quarters, has taken pressure off the group.
 

Fiat has held a major stake in Ferrari for 38 years. Founder Enzo Ferrari initially sold 50% of his company to the auto giant in 1968 and the Turin group increased its stake to 90% in 1988. The Ferrari family retains a 10% interest in the company.

Montezemolo, whose mentor was the late Fiat patriarch Gianni Agnelli, embodies the closeness of the relationship that has traditionally tied Ferrari to the Turin car maker. After a highly successful stint running the Ferrari Formula 1 team in the 1970s, he moved over to the parent company Fiat. Under Agnelli he handled its external relations and publishing interests before taking up various top management positions in Fiat-owned companies. He was called back by Agnelli in 1991 to chair Ferrari and to help restore the fortunes of its then floundering Formula 1 team. He was appointed Fiat chairman in 2004 after the death of Umberto Agnelli.

Report courtesy of ANSA