Fiat board to discuss a possible US stock listing

Fiats CEO Sergio Marchionne considers New York Stock Exchange to be the primary market for shares of the company created from a merger with Chrysler Group LLC, people familiar with the matter said.

Sergio Marchionnes proposal would mirror the direction taken last year by Fiats sister company, CNH Industrial, of which hes chairman. It would help him avoid making the politically difficult choice between Italy and the U.S. as the headquarters for the new group, and could allow the company to pay less tax on dividends.

Fiat, gained full control of Chrysler earlier this week after buying out the remaining 41.5% share. The automaker intends to decide on details of a merger on January 29. Marchionne has run the company, since it emerged from a bankruptcy in 2009.

“Ultimately, it’s a very rational decision,” said to Bloomberg, Erich Hauser, a London-based automotive analyst at International Strategy & Investment Group. “Going to the U.S. is reflective to the reality of this business and, ultimately, in the best interest when it comes to borrowing” needs.

Fiats board would still need to approve the proposals. Mr. Marchionne has overseen Fiats gradual acquisition of Chrysler since 2009 and now aims to consolidate the two companies to create the worlds seventh largest auto maker.

Fiat and Chrysler are expected to post a slightly higher combined net profit of 400 million euros for the fourth quarter, but a 24% drop for the year to 1.07 billion euros, according to the median of forecasts from 22 analysts compiled by Fiat. A drop will have been due to Fiats problems in Europe, where it faces weak sales and the cost of shifting its focus toward making more cars for its premium and luxury brands.

A primary listing in New York would be a milestone in Marchionne’s decade-long drive to transform Italy-based Fiat from an regional player into a carmaker with worldwide ambitions. Marchionne, wants to create a manufacturer with the scale to better challenge the likes of General Motors Co. and Volkswagen.

With a fiscal residency in the U.K., the group could avoid paying a withholding tax on dividends received from foreign operations and later distributed to shareholders, according to a corporate tax expert.

The biggest beneficiary of that move would be Exor SpA, an Italian investment company that is the single biggest shareholder in Fiat with a 30.05% stake. Exor, headed by Mr. Elkann, also holds the largest single stake in CNH Industrial at 27.20%. CNH Industrial, a maker of trucks and tractors, is the successor to Fiat Industrial SpA.

Fiat is expected to issue a revised industrial plan, the highlight of which will be details of the relaunch of Alfa Romeo, especially in the U.S. Mr. Marchionne has identified it among several brands with global potential. Fiat could also specify how it will raise more money to carry out the plan.