Fiat to Focus on Alfa Revamp after Merger with Chrysler, Lancia will be Reduced to Italy Only

Now that Fiat has full control of Chrysler and a green light for the complete merger, Sergio Marchionne says the Italian carmaker will focus on revamping its Alfa Romeo brand. Production of new models from the iconic marque will remain in Italy, as Fiat wants to revive its European operation and protect jobs.

In an interview with Italy’s La Repubblica newspaper, Marchionne reassured unions and politicians that Italy will continue to play an important role in Fiat’s plans.

“Just as the Jeep is sold in the whole world but is American to the bone, so Alfa’s DNA has to be authentically all Italian.  It will indeed remain at home,” the CEO said. Marchionne added that the sporty Alfa Romeo brand can be successful globally, something the Fiat brand cannot. Furthermore, Alfa Romeo has the potential of far greater sales than Maserati.

The full acquisition of Chrysler will allow Fiat to direct investments into underutilized Italian plants and help reinstate the thousands of workers on temporary layoff schemes, the executive added.

Fiat will exit the low and medium segment of the market, instead focusing on developing models within the Panda and 500 families, Marchionne said. He added that Lancia would become a brand for the Italian market only, which can only mean a slow death for the once famous rally-brand.

The Fiat boss said the Mirafiori plant would built “something else” besides the Maserati SUV, but didn’t go into details. As for the other Italian plants, the Melfi facility will produce the Fiat 500X and the baby Jeep, while Pomigliano will continue to make the Fiat Panda and “maybe a second vehicle”. The Cassino plant is seen as the most suitable for an Alfa Romeo relaunch.

As for the rumored New York listing of the merged Fiat-Chrysler company, Marchionne said a potential move of the listing or headquarters outside Italy was symbolic and did not mean production would be transferred away.

By Dan Mihalascu

Story References: La Repubblica via Reuters

PHOTO GALLERY

Merged Fiat-Chrysler Company May Be Listed in NYSE and Based in U.S., Report Says

Fiat’s recent acquisition of 100 percent of Chrysler has eliminated a major hurdle that prevented the two carmakers from merging into a single global automotive player. However, even though the Italian company has bought the American one, the seat of power of the new merged company may move to the U.S. rather than remain in Italy.

This hypothesis is supported by a Reuters report that quotes two sources close to Fiat as saying the merged company is likely to move its primary listing to New York as early as 2015. That would clearly indicate a shift of focus that reflects the operating facts.

Had Fiat not owned a majority stake in Chrysler, the Italian carmaker would have posted a €501 million ($690 million) loss in the first half of 2013 instead of a €435 million ($593 million) profit. Slumping sales in Europe have seriously affected Fiat, whose plants in Italy work at only 41 percent capacity.

Analysts say that listing the new merged company at the New York Stock Exchange would allow Marchionne to convince a larger number of investors that the newly formed company can rival with GM and Ford.

A New York listing would likely mean that the global headquarters of the merged company would be in the U.S. as well, a move that will alarm the Italian government, which wants to protect jobs in the country.

Marchionne may follow a similar strategy for the merger as the one used to combine Fiat Industrial with CNH to create a U.S.-listed manufacturer of agricultural vehicles. CNH Industrial has a primary listing in New York and a secondary one in Milan. Fiat has declined to comment on what will happen to Fiat-Chrysler after the merger.

By Dan Mihalascu

PHOTO GALLERY

Fiat Finally Completes Chrysler Acquisition, Will Pay VEBA $4.35 Billion for 41.5 Percent Stake

The rumors were true this time: on January 1, 2014, Fiat announced an agreement with the VEBA Trust (The Voluntary Employees’ Beneficiary Association), under which its wholly owned subsidiary, Fiat North America LLC, will acquire the VEBA Trust’s 41.4616% of Chrysler Group shares that is doesn’t currently hold.

Expected to close on or before January 20, 2014, the transaction gives Fiat complete control of Chrysler Group, with the Italian carmaker avoiding an IPO. The VEBA Trust will receive aggregate payments of $3.65 billion, plus $700 million in four equal annual installments.

The sums will be broken down as follows: Fiat will pay VEBA $1.75 billion from cash on hand when the deal closes, while Chrysler will contribute $1.9 billion through a special dividend to complete the transaction for the 41.5 percent stake.

The remaining $700 million will be paid by Chrysler Group in four annual payments each worth $175 million. The initial payment will be made on closing the transaction with Fiat, with additional payments to be made on each of the next three anniversaries of the initial payment.

In exchange for these contributions, the UAW (International Union, United Automobile, Aerospace and Agricultural Implement Workers of America) “will agree to certain commitments to continue to support the industrial operations at Chrysler Group and the further implementation of the Fiat-Chrysler alliance,” reads the official statement.

“The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization that will ensure all employees a challenging and rewarding environment,” said Sergio Marchionne, Chief Executive of Fiat and Chairman and CEO of Chrysler Group.

Marchionne now has green light to merge Fiat and Chrysler into one global carmaker, estimated by the executive to be the world's seventh biggest automotive player.

By Dan Mihalascu

PHOTO GALLERY

Fiat Reportedly Restarted Talks with VEBA to Buy Chrysler Shares

We’re pretty sure you’ve heard enough about Fiat’s attempts to gain full control of Chrysler, since this endeavor is taking longer than expected and is delaying the merger between the two carmakers.

The latest news is that Fiat CEO Sergio Marchionne has restarted negotiations with a United Auto Workers (UAW) medical trust to buy the remaining shares of Chrysler Group LLC.

According to a Bloomberg News report quoting three people familiar with the matter, Fiat executives met last week with representatives of VEBA (The Voluntary Employees’ Beneficiary Association), the retiree health-care trust. The meeting came after the trust earlier this month rejected a higher offer for it 41.5 percent stake in Chrysler - the first proposal made by Fiat since August.

According to analysts, Marchionne wants to avoid an IPO as it may prove costlier for Fiat to buy the remaining Chrysler shares on the stock market than by purchasing it directly from VEBA. The IPO was delayed for 2014 because of tax reasons.

IPO advisers evaluated Chrysler to be worth around $10 billion (€7.3 billion), with Fiat seeking to pay about $4.2 billion (€3 billion) for VEBA’s 41.5 percent stake. However, the trust asks for at least $5 billion. The gap is nevertheless narrower than the previous one of more than $1 billion.

Fiat now holds 58.5 percent of Chrysler after rescuing the company from bankruptcy in 2009. 

By Dan Mihalascu

PHOTO GALLERY