Fiat buys back Ferrari stake from Mubadala

After five years Mubadala, the investment company of Abu Dhabi, is selling its 5 per cent stake in Ferrari back to Fiat which has exercised its option to buy back the share in the Italian luxury car maker.

Handout images of Ferrari test drive in California. Courtesy of Ferrari.
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Fiat has paid €122 million (Dh612.8m) to buy back the 5 per cent stake in Ferrari that was sold five years ago to Mubadala Development, the investment company owned by the Abu Dhabi Government.

Confirmation of the transaction, which will take Fiat's stake in the luxury Italian car maker to 90 per cent, came on the day of the Abu Dhabi Grand Prix, marking a dramatic close to the F1 season at the Yas Marina Circuit.

Mubadala bought the 5 per cent stake in Ferrari in 2005 for a reported €114m, which suggests the company made an €8m profit on the transaction. At the time Ferrari was valued at about €2.3 billion.

The original seller was the Italian investment bank Mediobanca, and the deal included a "call option" that allowed Fiat to buy back the stake at a later date.

This option was deferred several times but has now been exercised by Fiat, reportedly at a price of €302.7 per share. The purchase price and the buyback was confirmed in Fiat's third-quarter results.

"I can confirm that Fiat has exercised the call option for the purchase of the Ferrari stake held by Mubadala," said a spokesman for Fiat. "We have no further comment to make."

A spokeswoman for Mubadala also confirmed the deal.

"We can confirm that Fiat exercised a call option to buy back the 5 per cent of Ferrari that we had acquired in 2005," she said.

"The call option, which was set to expire at the end of July, had been extended twice before by mutual consent between Fiat and Mubadala. We are currently in discussions to complete the transaction."

Links between Ferrari and Abu Dhabi go beyond the stake in the luxury car marker.

"We have a strong relationship with Ferrari and are continuously looking for ways to work together," added the spokeswoman.

Luca Cordero di Montezemolo, the chairman of Ferrari, told The New York Times this year that Mubadala "will remain for us a very important industrial partner".

In September, an Italian newspaper reported that Fiat was considering selling a substantial stake in Ferrari, but planned to retain a majority stake. Fiat later denied that it had any immediate plans to sell the firm, a position underlined by the decision to exercise the call option.

Piero Ferrari, the son of Enzo Ferrari, the founder of Ferrari, owns a 10 per cent stake in the company. According to Fiat's results statement, Ferrari's third-quarter net revenues were up by 12.6 per cent to €446m compared with the same period last year. Profit was up by 24 per cent during the same quarter to €76m.

Seth Holmes, the director of consulting at IMG Middle East, the sports marketing agency, said the link with Ferrari "has been excellent business" for both Abu Dhabi and Mubadala.

"They have an inextricable and ongoing link with Ferrari through their team sponsorship … and a permanent partnership and visual bond between the two in Ferrari World Abu Dhabi. All this with one of the world's most recognisable and aspirational brands," said Mr Holmes.

* With reporting from Ben Flanagan