Fiat Chrysler opens trading on NYSE – The Detroit News

Posted: Monday, October 13, 2014

New York — Newly merged Italian-American automaker Fiat Chrysler Automobiles NV began trading Monday morning on the New York Stock Exchange, a milestone for the world’s seventh-largest automaker.

Fiat Chrysler opened at $9 a share and rose sharply in early trading as much as 8 percent — but then fell back. Late morning it was trading at $8.96, down 0.47 percent from its opening price. About 590,000 shares traded hands in the first 20 minutes of trading.

The company completed its tie-up on Sunday and began trading its shares Monday morning under the stock ticker symbol “FCAU” — though it won’t immediately sell any shares the company owns until it conducts a road show. Fiat Chrysler CEO Sergio Marchionne and Fiat Chairman John Elkann, whose great-great-grandfather founded the company, are in New York on Monday to ring the closing bell of FCA’s first trading day on the NYSE.

The celebration is expected to be similar to General Motors Co.’s initial public stock offering four years ago that included banners, vehicles on display and then-CEO Dan Akerson ringing the opening bell.

A Netherlands corporation — the merger of Italian automaker Fiat SpA and its investment arm — it has its corporate headquarters in Slough, just outside London in a building called Fiat House. The stock will continue to trade on the Milan stock exchange.

Morningstar Inc. senior analyst Richard Hilgert, in a recent note to investors, said he expected plenty of volatility in the short term for the stock due to the “limited number of shares, confusion about valuation and no pre-debut management road show.”

“In our opinion, Fiat Chrysler’s stock is not for the faint of heart,” he said.

FCA executives did not travel to promote the listing, like most companies — including General Motors Co. four years ago — customarily do before going public.

IHS Automotive said Fiat Chrysler needs to make progress in certain areas, including adhering to U.S. accounting standards. And it remains the least fuel-efficient among major automakers in the United States, according to the EPA.

“While the listing on NYSE is a positive step for FCA and its ability to tap the U.S. financial markets, it has raised some questions and concerns from the financial community,” IHS said in a statement. “This includes the weaker news from Ford and General Motors with regards to their financial forecasts recently, as well as the complexity of the structure of the business.

“With this now complete, FCA will now be focusing on hitting the ambitious goals that were laid out during an investor day in May.”

FCA’s goals, outlined in a five-year growth plan in May, include exporting Jeeps globally, growing net profit five-fold and increasing sales to 7 million vehicles globally by 2018.

IHS Automotive says it does not expect FCA to hit that 7-million sales goal: IHS puts its forecasts at 5.1 million vehicles.

Chrysler hasn’t traded publicly since 2007, when Daimler AG sold an 80 percent stake in the company to private equity firm Cerberus Capital Management LP. It last traded as a standalone company in 1998.

The automaker downplayed the significance of the announcement.

“While the formation of Fiat Chrysler Automobiles is now official, today is really not all that different than Friday. The official formation of FCA is the next step in a process started in 2009” when the Obama administration gave Fiat control of Chrysler out of bankruptcy, Chrysler said in a Facebook posting.

“We’ve all seen the improvements and fruits of that process: From when we launched 16 new or significantly refreshed vehicles within the first 18 months, to the 2015 Dodge Challenger rolling off of the Brampton, Ont., assembly line, and our future new and refreshed lineup. Today, nothing really has changed from your — our owners’ — perspective.”

The company said it has “a new name with more financial resources, but we’re designing, engineering and building the cars, trucks and SUVs you’ve been driving the same way we did Friday.”

On Friday, Marchionne said the listing is aimed to better benchmark the company against General Motors and Ford Motor Co.

“As a global producer of vehicles, I think we’re fully equivalent to the other Detroit two,” he said. “I think the objective in coming to New York as a stock listing is really to try and get us evaluated and benchmarked against them.”

Marchionne also said FCA will release its nearly $900 million in shares that it owns from former Fiat shareholders opting to sell instead of taking FCA shares and shares in its treasury. When that happens, he said, “depends on market conditions, but they will come back into the U.S. market.”

“The whole objective here is to create flow to get the stock trading,” he said, adding this week is not the best time to release the shares.

Shares of both Ford and GM recently hit 52-week lows following their investor days. Ford said it expects to make $6 billion in pretax profit, $1 billion to $2 billion less than its original goal. GM tumbled following a Wall Street analyst’s warning to investors that he was cutting his profit outlook for the Detroit automaker.

Marchionne said he believes FCA is positioned globally to be as successful, if not more, in the medium- to long-term as GM and Ford. He mentioned Europe and Latin America as places he specifically sees the company having an upper hand in.

Fiat Chrysler is not offering any new shares Monday — just shares of Fiat SpA transferred from the Italian stock market that can be traded and purchased in New York. Still, it represents a significant milestone in a company that several years ago was on life support.

“There were days that were worse than others, but on this travel here, to FCA, I never ever doubted that we would get here because it’s the bloody right thing to do,” Marchionne said.

DShepardson@detroitnews.com

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