The last obstacle

7 August 2014 By Olaf Storbeck

Fiat’s falling share price complicates its Chrysler merger. CEO Sergio Marchionne’s grand plan to unify the Italian carmaker and its American subsidiary will survive, but Fiat-Chrysler’s U.S. float may be delayed. The Fiat drop also presents a trading opportunity for the brave.

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Fiat shares have lost about 10 percent since Aug. 1, when shareholders of the Italian carmaker approved a plan to incorporate Fiat and its U.S. subsidiary Chrysler into Dutch-registered entity Fiat Chrysler Automobiles (FCA). That reorganisation would pave the way for a U.S. listing of the world’s seventh-largest auto group.

Under the terms of the merger deal, dissenting Fiat investors can sell their shares for a cash exit price of 7.727 euros, 13 percent above the market price on Aug. 7. Fiat has said if it had to pay more than 500 million euros to shareholders, the merger would not go ahead.

“I am absolutely unfazed by all of this,” Fiat Chief Executive Sergio Marchionne said on Aug. 6, adding that if the creation of FCA failed at this time, he would wait “until we have better conditions to get this done.”

Fiat bought 20 percent of Chrysler in June 2009 and has since incrementally increased its ownership to 100 percent. In a $4.35 billion deal struck in January, it bought out a healthcare trust holding the remaining 41.5 percent

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