Pininfarina sale could see break-up

MILAN Wed Feb 2, 2011 10:08am EST

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MILAN (Reuters) - A break-up sale could be looming for niche auto designer and producer Pininfarina SpA (PNNI.MI), creator of almost every Ferrari sportscar since the early 1950s.

Two years after a debt restructuring left banks holding a pledge over the family owner's 77 percent stake, some buyers only want Pininfarina's renowned design operations.

"Some are not interested in the plants, others are interested in everything. A lot of Asian companies want the design and engineering," said a Milan investment banker who asked not to be named.

"The process is long because of the difficult debt situation. It is rather interesting for the service side and less for the production," he added.

Sale speculation doubled Pininfarina's share price this year, lifting its capitalization to near 200 million euros ($279.4 million), before the price eased back over the last two weeks.

China's Beijing Automotive Industry Holding Co, Germany's Edag, and Canada's Magna International Inc (MG.TO) have been cited as possible buyers of the company, which is also active in electric vehicles.

Pininfarina, which racked up 33.8 million euros of net losses in the first nine months of 2009, is expected to fetch around its market price, the Milan banker said.

Auto analysts say French billionaire Vincent Bollore, a partner of Pininfarina in the electric Bluecar joint venture, could end up buying the production activities.

Bollore, who holds an option to March 15, 2013 to buy Pininfarina out of their 50:50 venture for 10 million euros, has said he is ready to buy a 30 percent stake in the whole group.

"Bollore has battery production but lacks auto manufacturing capacity. If Bollore gets more contracts (for electric vehicles) in France it would be a logical move," IHS Global Insight's associate director Tom De Vleesschawer said. For the design side he sees a European buyer or a Chinese manufacturer.

SLOW PROGRESS

Since the December 2008 restructuring, the plan to sell the family's majority stake has made slow progress. In January, Pininfarina said it was still gathering expressions of interest and that a sale was at a very preliminary stage.

The global auto crisis has seen major manufacturers revamp links with design and niche producer companies.

Last year the rationalization saw Volkswagen AG's VOWR_p.DE Italian luxury car unit Lamborghini Holding SpA buy the Turin-based Italdesign Giugiaro SpA.

In 2009, Fiat SpA (FIA.MI) bought Carrozzeria Bertone SpA, the production arm of Italy's Bertone, which continues to operate independently in design and engineering.

In the 1970s, Bertone designed the only Ferrari model not produced by Pininfarina, the curvaceous Dino 308 GTX.

"A lot of manufacturers through the recession have looked at how they use these people and what resources they have internally...and they have rationalized," said Richard Gane, an auto industry consultant with PriceWaterhouseCooper.

Under a 2008 deal which saw holding Pincar taking on 180 million euros of debt, Pininfarina has scaled back production. Its main remaining contract is for the Volvo C70 car.

In design and engineering, about 50 percent of Pininfarina's work is for Chinese producers like Chery, Jianghuai Automobile (600418.SS), Brilliance China Automotive Holdings Ltd (1114.HK).

"The Chinese are still looking for good engineering companies and brands," Gane said.

Italian national pride could yet prompt Fiat luxury sports car unit Ferrari to bid for Pininfarina's design and engineering unit.

Ferrari said its cooperation with Pininfarina was unchanged, declining further comment.

"It would protect the heritage of Ferrari and make (its listing) more attractive on the market," De Vleesschauwer said.

(Editing by David Cowell)

($1=.7158 Euro)

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