NEW YORK (TheStreet) -- Shares of Fiat Chrysler Automobiles NV (FCAU) - Get Report are soaring, up 12.35% to $10.92, in midday trading after the auto manufacturer announced it will spin off its Ferrari brand.
The company revealed its plans to sell a 10% stake in the luxury sports car brand Ferrari, with the other 90% to be distributed among its shareholders, as it will be split off as a separate company through an initial public offering of its shares next year.
FCA also said it would issue $2.5 billion in convertible bonds to help fund its turnaround plan.
The spin off is a part of the five-year expansion plan by FCA CEO and Ferrari chairman Sergio Marchionne, as Fiat Chrysler intends on increasing its net income five folds by 2018.
"As we move forward to secure the 2014-2018 business plan and work toward maximizing the value of our businesses to our shareholders, it is proper that we pursue separate paths for FCA and Ferrari," said Marchionne in a statement.