Merger launches new chapter for Fiat Chrysler Automobiles – Detroit Free Press
Fiat shareholder approval Friday of a merger brings Fiat and Chrysler CEO Sergio Marchionne one step closer to his dream of completely restructuring the two automakers into a single automaker that can operate efficiently around the world.
The decision also marks the end of an era in Italy as Fiat — founded 115 years ago by Giovanni Agnelli — exits the country, at least as a company officially incorporated there.
Fiat shareholders who met in Turin, Italy, voted in favor of a merger involving Chrysler that has been five years in the works and will shift center of gravity abroad.
“This life of Fiat Chrysler started on June 10th, 2009,” Marchionne following the shareholder meeting on Bloomberg TV. “It’s been a long sequence of events that has allow this to happen. To see this thing come together now — this creation of this new entity — is almost a sigh of relief.”
Technically, shareholders were asked to vote in favor of folding Italy-based Fiat SpA into Netherlands-based Fiat Investments NV, which will be renamed Fiat Chrysler Automobiles. Chrysler will continue to operate as a subsidiary.
“Fiat is not leaving Italy, only the holding company will be organized under the laws of the Netherlands,” Marchionne told shareholders, according to the Wall Street Journal.
Practically, the merger is designed to make Fiat Chrysler Automobiles more attractive to investors and bankers, especially after new stock is listed on the New York Stock Exchange later this year. Many analysts say Fiat will need additional capital to complete an ambitious restructuring plan in Europe.
Fiat became Chrysler’s controlling shareholder in 2009 when the Auburn Hills automaker emerged from Chapter 11 bankruptcy. The Italian automaker became Chrysler’s 100% owner in January.
New stock, under the symbol FCA, is expected to begin trading on the New York Stock Exchange in mid-October assuming the deal isn’t challenged by investors or shareholders within 60 days.
“This entity has now formed,” Marchionne told reporters after the shareholder meeting. “We need to give it the space to operate. It’s a powerful organization. I think it has a huge amount of potential.”
Marchionne and the company’s board picked the Netherlands and London in an effort to avoid controversy either in Italy or the U.S.
“A Dutch incorporation … will provide additional flexibility in raising capital or making strategic acquisitions or investments in the future,” the company said in a document on its website.
While the legal structure of the companies will change, Marchionne has said few employees will be affected.
A Fiat spokesman said there will only be a small representative office in the Netherlands. However, a corporate office in London will house “central functions” of the company, the spokesman said. The number of employees that will work in London and the number of employees stationed there is still a “work in progress.”
Both Fiat’s board of directors and Exor, an investment firm controlled by Fiat’s founding Agnelli family, favored the merger.
Exor owns 30.05% of Chrysler. Fiat and Chrysler disclosed last month that Exor’s voting power could rise to as much as 46%, but only if all existing shareholders opted out of the loyalty voting structure.