The plans to make the seventh largest automaker in the world a true global player could be endangered if the long-awaited merger gets somehow delayed.
Sergio Marchionne, chief executive of both Fiat SpA and its US subsidiary Chrysler Group LLC wants to become as fast as possible the CEO of Fiat Chrysler Automobiles NV, a Dutch incorporated company with headquarters in London and stock listings in New York and Milan. But even as during an August 1 shareholders meeting the investors voted two-thirds in favor of the merger, the recent share drop, as well as the existence of dissenting investors could lead to the current plans being dropped.
The merger could be stopped because Italian law requires a formal offer to buy back stakes from dissenting investors – with a 500 million euros threshold. While the possibility would not all together scuttle the legal merger – the two companies already act as one firm – the plans to gather funds for the 48-billion euro ($64 billion) growth plan could be seriously jeopardized.
“With the share price where it is today, a delay is a possibility,” said Andrea Giuricin, a transport analyst at Milan’s Bicocca university. “If there is a delay, it would impact Fiat’s plans to lure foreign investors and ease its access to cash. Marchionne’s attempts to convince the market to the contrary show he is getting a bit nervous.”
The five-year business plan was set up with the goals of increasing five times the current profit and grow sales 60% overall, but the recent developments in many markets and Fiat’s dwindling results have triggered a huge stake slide – the shares fell to their lowest this year.