Fiat to convert preference,savings shares into ordinary shares as Chrysler merger approaches

Article by Christian A., on October 31, 2011

Fiat is planning to convert preference and savings shares into ordinary shares, a move that will cut the cost of equity and eliminate a possible obstacle to merging with Chrysler, which is currently majority owned by Fiat. Last Thursday, Fiat and sister company Fiat Industrial said that the proposed conversion plan will simplify the capital structure and the governance for the two groups.

Analysts consider the plan to be moderately earnings-enhancing since it will decrease the total number of issued shares and do away with the cost of higher dividends for holders of savings and preference shares.

They explained that making the equity structure simpler will permit Fiat to take away a potential obstacle to a full merger with Chrysler, which it has been managing since 2009 after it entered a bailout deal with the U.S. government in 2009. Fiat presently holds 53.5% of Chrysler. This is expected to increase to 58.5% by the end of the year.

In a report, Mediobanca's senior analyst Massimo Vecchio said that a merger with Chrysler is easier since savings shareholders would no longer be able to prevent it.

Notably, if Fiat chose to spin-off luxury sports car brand Ferrari, it would no longer have to issue Ferrari savings and preference shares to Fiat shareholders. [source: Guardian]

Topics: fiat, chrysler

If you liked the article, share on:

Comments

Recommended

J.D. Power has officially released the 2017 Vehicle Dependability Study, an annual list of the most dependable brands in the auto industry. Once again coming on top is Lexus, the...
by - February 26, 2017
Citroen revealed that its entry to the Chinese market is moving forward with the planned release of the new generation C5. While still on sale on this part of the...
by - February 26, 2017
There is definitely a second-generation Super Series from McLaren. Even in camouflaged form, it is simply incredible. But while we still don’t have the full data on how truly dynamic...
by - February 25, 2017
A lot of fans are excited with the news that Porsche could be unveiling a performance version of its Panamera 4 E-Hybrid plug-in hybrid during the 2017 Geneva Auto Show. ...
by - February 25, 2017
Tesla is finally setting a more “definite” schedule with regards to the official launch of the Tesla Model 3 electric car. A “limited production” is said to be slated to...
by - February 25, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries