Chrysler to remain a U.S. legal entity
Merged Fiat Chrysler board meetings 'preferably in the U.K.,' Marchionne says
Photo credit: Reuters
TURIN, Italy -- Chrysler Group LLC will remain a United States legal entity also after the completion of the Fiat Chrysler merger later this year, Fiat and Chrysler CEO Sergio Marchionne said.
Chrysler’s company name and legal form most likely will change, but how that will happen is a minor detail “not worth being discussed,” Marchionne told reporters on the sidelines of the Fiat annual general meeting here today.
Marchionne added that the timing of Fiat SpA’s extraordinary shareholders meeting to approve the new company name Fiat Chrysler Automobiles and the primary stock listing in New York is still unclear.
“We first need to get a clearing from the SEC on the filing documents and then we can call the Fiat shareholder meeting (here in Italy),” he said.
Marchionne added that he hopes to get Fiat shareholder approval by the summer and have the new company operative and listed in New York by the end of the year.
Fiat SpA (which bought control of Chrysler) will be incorporated into FCA NV using a recent European law related to cross-border mergers within the European Union. These rules do not apply to Chrysler Group LLC, which is a non-EU entity, and this is the reason why Chrysler Group LLC will remain a U.S. legal entity.
FCA NV will be a legal entity incorporated in the Netherlands, and will have its tax residency in the U.K.
Marchionne confirmed FCA shareholders’ meetings should take place in the Netherlands, while FCA board of directors meetings would be held “preferably but not compulsorily” in the U.K.
Earlier today, Marchionne said the combined automaker will have the potential to boost annual deliveries as much as 55 percent to 7 million vehicles following the merger with Chrysler.
“We have the capability to reach that level of production,” he said during the annual meeting. “We are equipped to go on the attack against the giants in our industry.”
Marchionne, who will unveil his strategic plan for the combined company in May, has said that automakers will need to sell in the magnitude of 7 million vehicles per year in the future to remain competitive. Fiat and Chrysler deliveries this year will total 4.5 million to 4.6 million vehicles, he said
The company has told shareholders to expect plenty of good news as the completion of a full merger with Chrysler opens greater global opportunities for the world's seventh-largest carmaker.
The creation of FCA after Fiat took full control of the third-largest U.S. auto group in January in a $4.35 billion deal paves the way for Fiat to easily and cheaply share technology, cash and dealer networks with Chrysler.
"The birth of FCA will end the precarious life of Fiat," Chairman John Elkann told shareholders today. "Today for the first time we have different prospects: we no longer need to play a game of survival ... you can expect much good news in the future."
Marchionne reiterated the group's forecast of a 2014 trading profit of between 3.6 billion euros ($5 billion) and 4 billion on revenue of around 93 billion.
Marchionne said the growth in shipments will be largely driven by higher volumes in North America and Asia-Pacific.
FCA expects a new strategy focusing on exports of premium brands such as Maserati and Alfa Romeo to help override some of the weak demand in its traditional markets, especially Italy, hit by a six-year slump in car sales in Europe.
Separately, Fiat Chrysler is continuing talks with Russia on a possible collaboration that could see the company setting up a new plant there to produce Jeeps and light commercial vehicles, Marchionne said.
"Russia continues to be a market of strategic relevance," Marchionne told a shareholders' meeting.
"The talks with the Russian Federation and Sberbank are continuing. We expect that the segment produced there will include Jeeps and light commercial vehicles ... it could include a locally-based plant."
Russia's ties to the West have been strained amid the crisis in the Ukraine and Crimean peninsula. The United States and its allies accuse Russian president Vladimir Putin of illegally seizing the Black Sea peninsula after a March 16 referendum they say was a sham.
Newspapers go to Wall Street
Elkann said that the group’s loss-making publishing activities will continue to be part of the automaker's umbrella corporate organization under FCA NV.
“Neither myself nor Sergio decided to enter the publishing business. Fiat has been a shareholder of RCS Mediagroup (Italy’s largest publishing group) for more than 30 years,” he said in response to reporters asking if the business would be spun off.
For almost a century Fiat also has owned the Turin-based La Stampa, Italy’s fourth-largest daily newspaper.
Asked if he sees a potential conflict of interest for an industrial group that also owns stakes in two publishers of newspapers and magazines, Marchionne replied “I honestly don’t see the point.”
Bloomberg and Reuters contributed to this report.
You can reach Luca Ciferri at firstname.lastname@example.org.