Fiat SpA share price up, overcomes Chrysler merger obstacle

Fiat SpA said in a statement today that it will spend less than the initially planned limit it had set to purchase shares from investors, who wanted to sell their stake before the company finalizes its merger with Chrysler Group LLC. The Italian car manufacturer said that the final amount of withdrawal rights is to be officially revealed by September 4th.

The Chairman of Fiat SpA Mr. John Elkann said in the companys statement, which was cited by Bloomberg: “We are now looking forward to the completion of this project.”

According to the Italy-based companys statement, the total spending is not expected to exceed the limit of €500 million ($658 million). If the amount were to surpass the initially set cap, the deal with Chrysler would have been delayed.

The two companies are to combine in order to form a new entity, which is considered to become the seventh-biggest auto manufacturer in the world. This would make Fiat more competitive and allow it to face the rivalry of auto giants such as General Motors Co., Toyota Motor Corp. and Volkswagen AG, which dominate the industry. The new company, which will be named Fiat Chrysler Automobiles NV, will have its legal headquarters in Amsterdam, tax residency in the UK, and its main stock listing will be in New York.

The merger was voted at a shareholders meeting earlier in August. The investors who did not support the reorganization were provided with the opportunity to tender their shares to Fiat, a right triggered by the companys decision to move office away from Italy. Although this jeopardized the merger plan, had the amount exceeded €500 million, Fiat said that the limit would not be exceeded.

Fiat SpA said in its statement, which was cited by Reuters: “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.”

Fiat SpA rose by 1.34% to trade at €7.54 per share by 11:47 GMT in Milan, marking a one year change of +28.56%. The company is valued at €9.31 billion. According to the Financial Times, the 25 analysts offering 12-month price targets for Fiat SpA have a median target of €7.00, with a high estimate of €10.50 and a low estimate of €4.00. The median estimate represents a -5.91% decrease from the last price of €7.44.