‘Fiat Chrysler Automobiles’ is new name, stock on NYSE – USA TODAY
A merged Fiat and Chrysler Group is to be called Fiat Chrysler Automobiles, and shares will be traded on the New York Stock Exchange by Oct. 1, according to the company.
Combining Fiat and Chrysler will briefly create what’s called Dutch NewCo, then renaming it Fiat Chrysler Automobiles N.V. and merging that with Italy’s Fiat S.p.a., the parent company.
That would seem to make it a Netherlands company, but it will be considered a U.K. company for tax purposes. Its stock also will trade on the Milan exchange.
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Neither Chrysler headquarters in Auburn Hills, Mich., not Fiat h.q. in Turin, Italy, was named the main h.q. That prickly issues remains to be settled. Switching to the U.S. would cause a firestorm of controversy in Italy, where Fiat is the largest private employer.
And there’d be a fierce backlash in the U.S. if a company rescued by American taxpayers’ money were to move out of the country.
CEO Sergio Marchionne likes to say the h.q. is on an airplane. He travels between the two countries often, sleeping on planes during the trips.
The company’s top executives are similarly eclectic, and maintain offices in Auburn Hills, Turin and other cities around the globe.
FCA says it will keep major research, engineering and financial operations in Turin, as well as at Auburn Hills.
Marchionne, in a conference call, said the new FCA is “the conclusion of a saga that started back in 2009,” when Fiat involvement was part of Chrysler’s Chapter 11 bankruptcy reorganization.
He noted that FCA becomes the seventh-largest car company in the world. Marchionne several times said FCA would be able to “move at the speed of light” to take advantage of financial and auto-market conditions, and to move new vehicles into showrooms.
“Putting two weak companies together does not create one strong company,” cautioned Stephanie Brinley, auto industry analyst at IHS Automotive. .
The merger is a good way to better allocate assets between the two units, but “It does not make Europe more profitable, it does not address the gap they face in China with a late arrival, it does not inherently improve Fiat’s overall weak performance, and it doesn’t address brand concerns for the U.S. Chrysler and Dodge lineups, where success is largely driven by Jeep and Ram.”
A somewhat plain FCA logo supplants the Chrysler Pentastar and the FIAT badge (the letters standing for italian words that mean Turin-based automaker). The new logo is meant to be neutral, Marchionne said: “It was designed effectively to provide a linkage between the two houses as opposed to the retention of one organization over the other.”
Though Chrysler is healthy and Fiat is losing money — common in economically foundering parts of Europe — there are now layoffs expected in Italy.
Last time Chrysler was taken over by a foreign maker was when Daimler-Benz said it was orchestrating a “merger of equals” with Chrysler in 1998, in a transaction then valued at $37 billion.
Daimler CEO Juergen Schrempp later acknowledged the companies were not at all meant to be equals. In a 2000 interview with the Financial Times, he said the deal was billed as a merger of equals “for psychological reasons” and that Chrysler actually was a “division” of Daimler.
Daimler beggared the U.S. maker. Then, Cerberus Capital and a group of investors paid Daimler $7.4 billion for 80% of Chrysler in 2007. The automaker wound up in government-scripted Chapter 11 bankruptcy reorganization in 2009.
Here’s how Fiat describes the latest merger in an explanation for analysts: “A statutory reverse merger of Fiat S.p.A. into a wholly owned Dutch NewCo to be renamed Fiat Chrysler Automobiles N.V. (upon closing of merger, N.V. will issue common shares with 1:1 exchange ratio).”
Fiat S.p.a. shareholders can opt out of the new company. They’ll be paid for their shares a price equal to the average trading price for six months.