Shares of Fiat Chrysler Automobiles and Ferrari dropped Monday following the abrupt departure of CEO Sergio Marchionne, who fell seriously ill following shoulder surgery.
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Fiat Chrysler announced on Saturday that Mike Manley, head of its Jeep and Ram brands, would take over as CEO, adding that Marchionne will be unable to return to work. At Ferrari, longtime Philip Morris executive Louis Camilleri will run the sports car maker, while John Elkann will serve as its chairman. Elkann is the current chairman of Fiat Chrysler and a member of the Agnelli family that controls the automaker.
Fiat Chrysler also said Monday the head of its business in Europe, the Middle East and Africa, Alfredo Altavilla, had resigned. Manley will oversee the business on an interim basis.
Shares of Fiat Chrysler fell 1.8% during the trading session. Ferrari was down 2.5%.
The sudden C-suite transition worried investors who had expected Marchionne, 66, to remain involved with Fiat Chrysler in some form following a planned departure in 2019. Marchionne is considered a key figure in the automotive industry and the histories of Fiat and Chrysler. He oversaw the transformative merger of the two car manufacturers and was instrumental in their resurgence, including Jeep’s global expansion.
Analysts at CFRA lowered their price target to $24 from $29, citing rising uncertainty from the management transition and potential tariffs on vehicle imports. The firm added that Manley “has a track record of success with the very profitable Jeep SUVs and Ram trucks, which should bode well.”
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“Still, while the management shift was already planned for 2019 and considering our expectation of a relatively smooth transition, we often see increased corporate risk of underperformance following the exit of a dynamic, transformative and charismatic leader,” CFRA analyst Efraim Levy wrote in a note to clients.
Under Marchionne’s leadership, Fiat Chrysler and Ferrari saw their stocks post sizable gains. Fiat Chrysler’s shares are up more than 60% over the past 12 months.