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Chrysler and Fiat on path to merger

Article By: ,  Financial Analyst
August 29, 2014 5:15 PM

Italian carmaker Fiat has announced that a merger with US counterpart Chrysler was closer than ever, after a tally suggested most shareholders will not oppose the move.

Although Fiat shareholders overwhelming approved the merger earlier in August, the company is waiting for the final results of a vote by dissenters, who have the right to exit according to Italian law.

Chief executive Sergio Marchionne aims to create Fiat Chrysler Automobiles, a new company with a tax residency in the UK, legal headquarters in Amsterdam and primary stock market listing in New York, which would help fund the plan.

Fiat said that if investors cashed out more than €500 million (£397 million) in shares, the merger to create Fiat Chrysler Automobiles would be off.

However, the company said it was finishing a count of shares for which cash exit rights had been validly exercised, but it could already say that so far the €500 million limit would not be exceeded, Reuters report.

"Fiat has determined that even if all remaining unmatched notices and unmatched confirmations were to be matched, the maximum number of shares for which cash exit rights have been validly exercised will yield an aggregate exposure that is below the cap," it said in a statement.

"I am delighted with these results," Fiat chairman John Elkann said in the statement. "We are now looking forward to the completion of this project."

The company plans to publish the final count by September 4th.

Analysts quoted by the Wall Street Journal say the reorganisation could be an important steppingstone for Fiat's five-year, €48 billion business plan. The company currently owes €9.7 billion in net debt.

Fiat shares were up 0.20 per cent to €7.4550 at 10.12 ET.

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