Fiat Chrysler & Maserati Spinoff

Fiat Chrysler is looking to spin off the Maserati and Alfa Romero brand as well as their components operations. This would focus on mass market cars to make the Chrysler more attractive which could be worth as much as 7 billion euros ($8.3 billion). The plans as well as separating one or more of their component units which includes Teksid and Comau may not be made until early next year.

Goldman Sachs estimated that Fiat’s businesses could be worth about 50 billion euros which is double the group’s current enterprise value of 24.5 billion euros. The company’s shares increased 4.3% in Milan trading to a record high of 11.96 euros which valued the company at 18.5 billion euros. Despite a 34 percent surge this year, Fiat shares are still among the cheapest in the Stoxx 600 Automobiles & Parts index, trading at 4.6 times estimated 12-month earnings compared with the industry average of 7.4 times according to Bloomberg. The company is looking to eliminate 4.2 billion euros in debt by the end of 2018.

Under this plan, Fiat will still keep Jeep to anchor the mass market car business that will include the Dodge and Ram nameplates. Alfa Romeo on the other hand still needs billions of euros in investment to develop new models to compete with competitors such as BMW and Mercedes.

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