Exor, the investment company of the Agnelli-Elkann family, has announced its decision to sell 4% of Ferrari's shares, amounting to approximately 7 million shares valued at around €3 billion. The transaction was initiated through an accelerated bookbuilding process aimed at institutional investors, and marks a strategic move by Exor to diversify its investments.
John Elkann, CEO of Exor, expressed confidence in Ferrari's future, stating, "The transaction will allow us to reduce our concentration and improve diversification, as we pursue our goal of building great companies. Our support for Ferrari and our confidence in its solid future are unwavering." After the completion of the sale on March 3, Exor will remain the largest shareholder of Ferrari, holding approximately 20% of the economic rights and 30% of voting rights, reinforcing its long-term investment strategy.
Despite the reduced stake, Exor's decision appears strategic, as funds raised from the sale will be partly allocated for stock buybacks and significant acquisitions. Analysts predict the sale price is set at around €450 per share, reflecting a slight discount compared to previous closing prices. This maneuver is seen as a necessary step to alleviate the extensive concentration of Ferrari within Exor's investment portfolio, which had risen from 15% to 50% of its net asset value.
Following the announcement, Ferrari shares experienced volatility, aligning closely with the offered price, indicating potential market apprehension about this substantial divestiture. Exor is expected to maintain its commitment to Ferrari through established governance agreements, ensuring no immediate changes to the company's leadership structure as noted by analysts from Equita. They remarked, "Exor aims to reduce the weight of Ferrari on the portfolio, which would drop from 50% to 43%, allowing for significant acquisition financing."
Alongside the share sale, Ferrari announced plans to repurchase up to 10% of the offered shares from the market, valued at €300 million, marking the seventh tranche of its stock buyback program initiated to improve shareholder returns. This round of buybacks will be part of Ferrari's commitment to return capital to its investors, showcasing its financial health even during times of market adjustment.
Economic analysts view Exor's transaction as timely and strategically advantageous, especially considering the potential upcoming challenges posed by international tariffs, particularly from the U.S., which may affect Ferrari's revenues. With President Trump recently signaling possible tariffs on imported vehicles from Europe, which contribute significantly to Ferrari's revenue, reducing exposure could be seen as prudent risk management. The risks and valuations surrounding Ferrari make this sale not only beneficial for Exor but also reflective of the current market's demands and expectations.
Overall, this transaction signifies Exor's proactive approach to maintaining financial flexibility and enhancing portfolio robustness. The decision to divest part of its Ferrari stake, coupled with initiating new buybacks, showcases Exor's commitment to leveraging its considerable holdings strategically, all the meanwhile reassuring market confidence through continued investment in Ferrari's governance and longevity.
With Exor's lock-up agreement on the remaining shares standing at 360 days, it demonstrates their confidence and commitment to Ferrari's prosperous future, and the intention to facilitate optimum returns through diversified investments and strengthened financial structure. This calculated decision may set the stage for future expansions and opportunities within the competitive automotive market.