FCA merger considered bad for investors image

Although the shareholders’ meeting that would approve Fiat SpA’s merger to its US subsidiary, the Chrysler Group, looks like a done deal, there are still those who advise against it.

The latest veto supporter is proxy advisor ISS, which bases its judgment on the fact that the cross-continental merger between the Italian and US automakers would end up diluting shareholder rights.

“Despite the potential benefits of a NYSE-listing in attracting new investors, [the merger] would decrease shareholder rights,” ISS said in a recommendation document.

The Fiat SpA shareholder meeting is scheduled on August 1 and was called to vote upon the recently completed buyout of the US carmaker – with the newly formed Fiat Chrysler Automobiles NV (now a Dutch holding with the international headquarters in London) ready to incorporate both Fiat SpA and Chrysler Group LLC.

The newly formed seventh-biggest carmaker in the world is also mulling a New York Stock Exchange primary listing, with a secondary one in Milan to boost its appeal to international investors and secure the necessary cash to fund its ambitious five-year strategy. FCA’s chief executive Sergio Marchionne declared himself confident that the necessary two-thirds majority would be easily achieved, even if a negative recommendation from a big proxy advisor like the ISS could complicate matters.

Via Automotive News Europe