Fiat Announces Demerger of Its Capital Goods Businesses

Italian car manufacturer Fiat announced today its Board of Directors intents to separate its capital goods businesses by way of a demerger. The Fiat Board has approved Fiat Industrial S.p.A. and liabilities will be separated from the car business and relating components, which include Fiat Group Automobiles, Ferrari, Maserati, Magneti Marelli, Teksid, Comau and FPT Powertrain Technologies.

The demerger date is expected to be January 1, 2011, when shares of Fiat Industrial will be assigned to Fiat shareholders on a one to one ratio. After that date, the companies will have their own management teams and boards of directors.

This move will allow both businesses to strategically develop independently of each other. Additionally, the Board believes that the transaction would allow for the proper valuation in the capital markets of these two businesses.

As a result of the demerger the Total Equity of Fiat will be reduced by EUR 3,750 million, which will decrease the nominal value of each class of shares that, after the demerger date, will be equal to euro 3.50.

The Board of Directors has authorized the Chairman and the CEO of Fiat to call the ordinary and extraordinary shareholders meeting to approve the demerger, which is expected to be duly convened with a full quorum on September 16, 2010.

“The Demerger will be made at book value and will therefore have no effect on the consolidated results of the Group or on the statutory result of Fiat S.p.A. for the year ended December 31, 2010,” a company statement reads. “No shareholder withdrawal rights will be triggered as a result of the Demerger.”