News Column

Fiat Chrysler Automobiles Clears Major Hurdle

August 29, 2014

Alisa Priddle and Brent Snavely, Detroit Free Press

Sergio Marchionne, CEO of Fiat and Chrysler Group (file photo)
Sergio Marchionne, CEO of Fiat and Chrysler Group (file photo)

Aug. 29--Fiat's merger creating a single, global automaker, Fiat Chrysler Automobiles, has cleared its biggest remaining hurdle by not exceeding a limit on cash paid out to current Fiat shareholders who don't support the deal.

CEO Sergio Marchionne is combining Fiat and Chrysler into a new company whose shares will trade on the New York Stock Exchange under the symbol FCA and recapitalize the company's debt.

Fiat said today that shareholders asking for cash rather than shares in FCA can be paid for less than 500 million euros, the limit set in the merger agreement. The deal would have collapsed had that threshold been exceeded.

"I am delighted with these results. We are now looking forward to the completion of this project, which has been on the drawing board since the acquisition of all of the equity interest in Chrysler Group," said Fiat Chairman John Elkann. "The listing on the New York Stock Exchange will give proper relevance to the importance of the Group's activities in the U.S. market and make our financing activities more efficient."

Even though Chrysler was absorbed by Fiat earlier this year the transaction enables the restructuring of Fiat in Europe. Fiat SpA will cease to exist as an Italian carmaker.

Fiat Chrysler Automobiles will be the world's seventh-largest automaker. However, it is only a small player in China and India -- now two of the world's largest automotive markets -- and Fiat is struggling in Europe.

Marchionne outlined an ambitious, five-year, 48 billion euro plan in May in Auburn Hills that depends on a massive overhaul of the company's European operations and rapid global growth for the Alfa Romeo, Maserati and Jeep brands.

The challenge now for Marchionne is for Fiat Chrysler Automobiles to execute the plan he has laid out that calls for the automaker to increase global sales of cars and trucks from 4.4 million in 2013 to 7 million by 2018.

Fiat Chrysler Automobiles will be incorporated in the Netherlands and headquartered in London. Marchionne has said operations of Fiat in Italy and Chrysler in Auburn Hills will be largely unaffected by the corporate reshuffling.

Marchionne thanked Fiat shareholders who accepted shares in FCA rather than sell.

"I am reassured by the fact that the vast majority of our equity holders have remained loyal and committed shareholders," Marchionne said in a statement. "Their belief in and support of the strategic plan we laid out for the next five years is of crucial importance as we embark on the execution phase which will dramatically improve the market positioning of our group and our brands."

Fiat said its tally of shareholder votes is preliminary, and said a final tally will be released by Sept. 4.

"Based on the notices and confirmations received, Fiat has determined that the 500 million euro cap has not been exceeded," the company said in a statement.

Creditors who oppose the deal have until Oct. 4 to sell their shares for 7.727 euros each.

Following the news, shares of Fiat Spa remained unchanged Friday at 7.44 euro per share. The company's shares dropped to a low of 6.47 euros in recent weeks as concerns surfaced about the merger.

Marchionne is hoping to list stock of the company on the NYSE the company can attract more investors by mid-October.

Fiat became Chrysler's controlling shareholder in June 2009 when the Auburn Hills automaker emerged from bankruptcy. Fiat acquired all of Chrysler's remaining shares in January and became the 100% owner of Chrysler, which is now a subsidiary of Fiat.

Contact Alisa Priddle: 313-222-5394 or Follow her on Twitter @AlisaPriddle


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Original headline: Fiat clears major hurdle for Fiat Chrysler combo,

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