Tags: fiat | chrysler | stock | listing

Fiat Said to Weigh NY Listing After Merger With Chrysler

Wednesday, 24 Apr 2013 12:58 PM

Fiat SpA, Italy’s biggest manufacturer, may select New York as the primary exchange for its stock after a planned merger with Chrysler Group LLC, four people familiar with the matter said.

Chief Executive Officer Sergio Marchionne is evaluating the Turin-based company’s switch from Milan as the carmaker’s revenue and profit center shifts to the U.S., said the people familiar with Fiat’s financing plan, who asked not to be named as the matter is private. A Fiat representative declined to comment.

Fiat may keep Milan as a secondary listing, another person said. While no final decision has been made and other possibilities have been considered, the move would be highly political and symbolic for debt-ridden Italy as it struggles to emerge from a humbling cycle of recessions. The Wall Street Journal reported on the possible New York listing earlier Wednesday.

The executive, who runs both Fiat and Chrysler, plans to combine the two manufacturers to forge a global automaking group to challenge General Motors Co. and Volkswagen AG. Fiat is looking to buy the rest of Chrysler after accumulating a 58.5 percent stake since taking control in 2009 as the U.S. company emerged from bankruptcy.

“It makes a lot of sense for Marchionne to list Fiat- Chrysler in the U.S.,” said Erich Hauser, an analyst for Credit Suisse in London. “Refinancing costs are typically lower and aren’t so much subject to the funding costs of sovereign bonds. Also, manufacturers tend to get higher multiples.”

U.S. Shift

The Auburn Hills, Michigan-based company has become the group’s cash machine as Fiat struggles to end losses in Europe, which totaled more than 700 million euros ($908 million) last year. Fiat generated 75 percent of 2012 operating profit in North America.

“Italy and Turin should understand that the old Fiat, as we knew it, doesn’t exist anymore,” said Giuseppe Berta, a Fiat historian and business professor at Milan’s Bocconi University. “The carmaker now has the U.S. as its biggest market, so I would be surprised if Marchionne doesn’t choose the New York Stock Exchange.”

Marchionne, 60, who grew up in Canada, made it clear that the U.S. is an option to improve access to investors.

VEBA Stake

Fiat “should somehow look at the U.S. market for its possible benefits,” Marchionne said March 19 in Geneva when asked if he would move the company’s main listing of the combined entity to the U.S. “Fiat has opened itself up fundamentally and irreversibly to the outside world,” he told investors at the April 9 general meeting.

Before the listing decision can be finalized, Fiat first has to buy the remaining 41.5 stake owned in Chrysler from United Auto Workers retiree healthcare fund, or VEBA. The two sides are in court disputing the price for part of the shares that Fiat is seeking to buy under options held by the Italian company.

Marchionne expects a Delaware court to decide on the issue by the end of June. The resolution of the court case would help him provide “clarity” on the merger by the end of the year, he said earlier this month.

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Fiat SpA, Italy’s biggest manufacturer, may select New York as the primary exchange for its stock after a planned merger with Chrysler Group LLC, four people familiar with the matter said.
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2013-58-24
Wednesday, 24 Apr 2013 12:58 PM
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