Fiat shareholders approve Chrysler merger

02 Aug 2014

1

Fiat, Italy's largest industrial enterprise, is all set to shift to the US stock markets, following the overwhelming vote by its shareholders on Friday approving its merger with Chrysler.

The negotiations that five lasted five years since Fiat took over Chrysler in a no-cash deal as it emerged from bankruptcy in June 2009 (See: Fiat completes acquisition of Chrysler LLC's assets), will see the 115-year-old Italian car maker seek a US listing as a new company, Fiat Chrysler Automobiles NV, based as a legal entity in the Netherlands with its registered offices in the UK for taxation purposes.

The merger proposal received 84 per cent of shares at the shareholders' meeting, while the votes against represent around 8 per cent of total shares.

Dissenting shareholders have a couple of weeks to opt out, cashing in their shares at €7.727, or about 7 per cent above current share price.

There is a longer opt-out period of 60 days for bondholders.

According to CEO Sergio Marchionne, if the total value of the shares represented by dissenting shareholders were to exceed €500 million, the merger would be put off  temporarily.

"If it should go badly, we will come back at another time," Marchionne told reporters.

He said he set the €500-million ceiling as "the amount I was willing to pay," chron.com reported.

By combining resources with the US carmaker, the company formerly known as Fabbrica Italiana di Automobili Torino could better compete with the bigger rivals like General Motors, Volkswagen and Toyota, according to Marchionne.

Created by Italian-Canadian chief executive Sergio Marchionne, Fiat Chrysler Automobiles (FCA), would be incorporated under Dutch law.

Erik Gordon, a professor at the University of Michigan said, Marchionne did not want to abandon Italy; he wanted FCA and himself to be global players, and the centre of gravity of FCA has to be repositioned in order to do that. He added, it was a little sad for Italy.

According to commentators, the new entity's cosmopolitan structure reflected an industry shift away from national champions like Fiat.

Vincenzo Longo of IG Group, was quoted by chron.com, as saying Marchionne needed Wall Street, where Fiat Chrysler planned to locate its primary listing by mid-October. He added, there was more opportunity there than a "peripheral
place like what the Italian market has become."

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