Fiat Shareholders Exercise $610 Million in Withdrawal Rights

Sep 04, 2014 2:58 am ET

(Updates with CEO’s comments in fifth paragraph.)

Sept. 4 (Bloomberg) -- Fiat SpA investors exercised 463.6 million euros ($610 million) in cash-exit rights, 7.3 percent less than the limit set by the Italian carmaker to complete a merger with its U.S. unit Chrysler Group LLC.

About 60 million shares were submitted by investors at the cash-exit price of 7.727 euros a share, Turin-based Fiat said today in a statement. Had the tally exceeded the company’s 500 million-euro spending cap, the combination with Chrysler would have been delayed.

Fiat said a week ago that the merger is on track for completion by mid-October as the cost of buying out investors who want to pull out wouldn’t exceed the limit. The carmaker reiterated today that the deal won’t be completed should buyout costs for withdrawal rights and creditors opposing the transaction amount to more than the cap.

The stock submitted will be offered to the rest of Fiat’s investors at the exit price from tomorrow through Oct. 6, the company said. Afterward, the carmaker may offer it on the open market at that price.

Chief Executive Officer Sergio Marchionne said on Aug. 30 that the shares offloaded by the departing investors may be used “to create liquidity.” The manufacturer will sell the stock as part of the newly created Fiat Chrysler Automobiles NV’s listing on the New York Stock Exchange, which may take place Oct. 13, he said.

Marchionne is merging Fiat with Auburn Hills, Michigan- based Chrysler to create the world’s seventh-largest automaker and become more competitive against industry heavyweights such as General Motors Co., Volkswagen AG and Toyota Motor Corp.

Fiat’s stock fell to the lowest this year on Aug. 6 amid concern that the cost of buying out shareholders would total more than the 500 million-euro budgeted, potentially leading to a delay in the combination. The exit price is 1.9 percent more than the 7.58 euros that Fiat shares cost at the close in Milan yesterday.