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Considering that Fiat S.p.A. was founded in 1899, the Italian company is leaving its home country for the Netherlands after the Agnelli family and other big shareholders agreed to merge with Chrysler. Fiat Chrysler Automobiles NV is the name of the new entity and this move is more or less a symbol of how Fiat and Chrysler-owned brands try to adapt to the hard knock world of globalization. So what does this merger actually do for the FCA NV?
Although assembly and other operations will still be going strong in its home country, Fiat S.p.A. exits Italy as a company officially incorporated there and morphs into a holding company in the Netherlands. While the new entity is called Fiat Chrysler Automobiles NV, the Chrysler end of the merger will still operate as a subsidiary. Except for a change of name, what else does this merger bring?
To be frank and keep things as simple as possible, this merger is practically a way to make the FCA more attractive to investors and high rolling bankers, more so when you take into consideration that the new stock will be listed at the New York Stock Exchange (NYSE) later in the year. That is a good plan at first glance, but to be competitive on such a dynamic market, additional capital will be needed to restructure the company's operations in Italy, namely the unprofitable factories and the slow-selling nameplates.
As curious as it may sound, Sergio Marchionne told the media that the Netherlands will see the opening of only a representative office, while the city of London will be the place to house an office with "central functions." It's also known that Fiat's board of directors and an investment company controlled by the Agnelli family favored the merger. Exor, as this company is called, currently owns a tad over 30 percent of Chrysler, but its voting power may rise up to 46 percent if all the existing shareholders will be opted out in favor of the loyalty voting structure.
What's a loyalty voting structure? By including provisions for Fiat shareholders, one Fiat share will transform to one share of the FCA's common stock. The loyalty voting structure gives shareholders double the voting power, with two votes for every share of the common stock. Shareholders of both Fiat stock and those who have held stock for at least three years are included in this voting structure.
Although this latest of events has all the chances to make Fiat and Chrysler more competitive companies in the near future, the group is still having a hard time in places such as Latin America and China. If Fiat will be able to meet its promised targets, only time will tell. Fingers crossed Lancia won't be lost along the way and the brand's turnaround will start as soon as 2018 with an all-new model.
To be frank and keep things as simple as possible, this merger is practically a way to make the FCA more attractive to investors and high rolling bankers, more so when you take into consideration that the new stock will be listed at the New York Stock Exchange (NYSE) later in the year. That is a good plan at first glance, but to be competitive on such a dynamic market, additional capital will be needed to restructure the company's operations in Italy, namely the unprofitable factories and the slow-selling nameplates.
As curious as it may sound, Sergio Marchionne told the media that the Netherlands will see the opening of only a representative office, while the city of London will be the place to house an office with "central functions." It's also known that Fiat's board of directors and an investment company controlled by the Agnelli family favored the merger. Exor, as this company is called, currently owns a tad over 30 percent of Chrysler, but its voting power may rise up to 46 percent if all the existing shareholders will be opted out in favor of the loyalty voting structure.
What's a loyalty voting structure? By including provisions for Fiat shareholders, one Fiat share will transform to one share of the FCA's common stock. The loyalty voting structure gives shareholders double the voting power, with two votes for every share of the common stock. Shareholders of both Fiat stock and those who have held stock for at least three years are included in this voting structure.
Although this latest of events has all the chances to make Fiat and Chrysler more competitive companies in the near future, the group is still having a hard time in places such as Latin America and China. If Fiat will be able to meet its promised targets, only time will tell. Fingers crossed Lancia won't be lost along the way and the brand's turnaround will start as soon as 2018 with an all-new model.
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