News Column

Fiat Looks Abroad After Chrysler Merger Vote

August 1, 2014

Associated Press

Fiat stockholders have approved of a merger with Chrysler (AP)
Fiat stockholders have approved of a merger with Chrysler (AP)

TURIN, Italy (AP) Fiat shareholders voted Friday overwhelmingly in favor of a merger with Chrysler that has been five years in the works and will shift the 115-year-old carmaker's center of gravity abroad.

The approval paves the way the new company, to be called Fiat Chrysler Automobiles, to list its shares in the U.S., likely by mid-October. It will be legally based in the Netherlands and have its fiscal home in Britain.

A caveat to the merger remains. Dissenting shareholders have a couple of weeks to opt out, cashing in their shares at 7.727 euros ($10.35), about 7 percent above current share price. Creditors have a longer opt-out period of 60 days.

If the total request exceeds 500 million euros, CEO Sergio Marchionne said the merger would be off __ temporarily.

"If it should go badly, we will come back at another time," Marchionne told reporters. He said he set the 500 million euros ceiling as "the amount I was willing to pay."

A total of 85 percent of shares represented at the assembly were cast in favor of the merger. The votes against represent some 8 percent of total shares, which would easily put demand over the 500 million-euro cap. However, the vote is not necessarily indicative of a desire to cash out: A number of the shareholders said they were voting against for sentimental reasons, citing Italy's loss of prominence in the Fiat universe, but that they intended to stay on as shareholders.

Chairman John Elkann, whose family controls 30 percent of Fiat's shares, said they would not see a postponement of the merger as a failure. "We are hopeful," he said.

Marchionne told the more than 1,200 shareholders present at what is likely to be the last general assembly in Turin, Fiat's birthplace, that the alliance has already made Fiat and Chrysler the seventh-largest automaker in the world, producing 4.4 million cars last year.

He is betting that the combined company, boosted by 48 billion euros ($67 billion) in planned investments in part to push Italian production toward higher-margin luxury models, would have the capacity to produce 7 million cars a year by 2018.

But Marchionne also acknowledged that markets were skeptical of his ambitions. Shares in Fiat have dropped 14 percent since he laid out Fiat Chrysler's five-year plan in May.

"We almost went bankrupt in 2004 as Fiat and Chrysler did go bankrupt in 2009," Marchionne said. "Sinners have to bear the burden on proving themselves. We are willing to pay the price."

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Original headline: With vote for Chrysler merger, Fiat looks abroad


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Source: Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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