Shares of Fiat Chrysler (FCAU - Free Report) rose more than 5% in midday trading on Wednesday after the company said it is considering options to spin off the upscale Maserati and Alfa Romeo brands, as well as its components operations.
According to Bloomberg, Fiat Chrysler is considering the spinoffs to focus the company on mass-market cars. This would make the car automobile company more attractive for a potential buyer. Combined, the two luxury car brands are worth more than $8.3 billion.
This news follows a series of reports about Fiat Chrysler and its potential buyout. Last week, the stock rose on the news that a Chinese car manufacturer was interested in the company. And just this Monday, shares of Fiat Chrysler jumped after reports indicated that Great Wall Motor, China’s largest SUV and pick-up manufacturer, confirmed its interest in acquiring Fiat Chrysler.
However, Great Wall Motor has since said there are “big uncertainties” whether it will continue to study Fiat Chrysler for a potential acquisition. In a filing to the Shanghai stock exchange, the Chinese company said that its efforts have “not generated concrete progress as of now.”
Fiat Chrysler previously spun off their Ferrari (RACE - Free Report) brand in January 2016. Since then, shares of Ferrari have grown from its IPO price of $60 per share to $115.18 per share as of Tuesday’s close.
Analysts are hoping for similar success should Fiat Chrysler spin off the Maserati and Alfa Romeo brands. Jefferies raised the price target on the company from €14 to €16, while Morgan Stanley (MS - Free Report) upgraded the stock to Overweight with a new price target of €15.
The timing of the potential overhaul for Fiat Chrysler is uncertain and a final decision may not be made until early next year.
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