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Ferrari: The 2015 Initial Public Offerin...

Schill, Michael J....

Case

Ferrari: The 2015 Initial Public Offering

Schill, Michael J.; Craddock, Jenny

F-1775 | Published January 11, 2017 | 20 pages Case

Collection: Darden School of Business

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This case examines the October 2015 initial public offering pricing decision for legendary Italian sports car company Ferrari by Fiat Chrysler management. Students are invited to model the value of Ferrari in light of Ferrari CEO Sergio Marchionne’s interest in expanding production despite the company’s long standing tradition of severely limiting production strategy to maintain an exclusive brand image. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples for a company that exists in two sectors: automotive and luxury goods.

Review the institutional aspects of the equity issuance transaction; hone corporate valuation skills, particularly using market multiples; develop an appreciation for the considerations associated with identifying an appropriate comparable set; and explore the costs and benefits associated with public share offerings.