Fiat shareholders approved a merger Friday that will lead to the creation of a new company – Fiat Chrysler Automobiles – at a meeting in Turin, Italy.
The decision marks the end of an era in Italy, as Fiat – founded 115 years ago by Giovanni Agnelli – exits the country, at least as a company officially incorporated there.
Approval also brings Fiat and Chrysler CEO Sergio Marchionne one step closer to his dream of completely restructuring the two automakers into a single automaker that can operate efficiently around the world.
Fiat shareholders who met in Turin voted in favor of a merger with Chrysler that has been five years in the works and will shift the center of gravity abroad.
“This life of Fiat Chrysler started on June 10, 2009,” Marchionne said following the shareholder meeting on Bloomberg media. “It’s been a long sequence of events that has allowed this to happen. To see this thing come together now – this creation of this new entity – is almost a sigh of relief.”
Technically, shareholders were asked to vote in favor of folding Italy-based Fiat Spa into Netherlands-based Fiat Investments NV, which will be renamed Fiat Chrysler Automobiles. Chrysler will continue to operate as a subsidiary.
“Fiat is not leaving Italy, only the holding company will be organized under the laws of the Netherlands,” Marchionne told shareholders, according to The Wall Street Journal.
Practically, the merger is designed to make Fiat Chrysler Automobiles more attractive to investors and bankers, especially after new stock is listed on the New York Stock Exchange later this year. Many analysts say Fiat will need additional capital to complete an ambitious restructuring plan in Europe.
Fiat became Chrysler’s controlling shareholder in 2009 when the automaker emerged from Chapter 11 bankruptcy. The Italian automaker became Chrysler’s 100 percent owner in January.
New stock, under the symbol FCA, is expected to begin trading on the New York Stock Exchange in mid-October as long as the deal isn’t challenged by investors or shareholders within 60 days.
“This entity has now formed,” Marchionne told reporters after the shareholder meeting. “We need to give it the space to operate. It’s a powerful organization. I think it has a huge amount of potential.”
Marchionne and the company’s board picked the Netherlands and London in an effort to avoid controversy either in Italy or the United States.
“A Dutch incorporation … will provide additional flexibility in raising capital or making strategic acquisitions or investments in the future,” the company said in a document on its website.
While the legal structure of the companies will change, Marchionne has said few employees will be affected.
A Fiat spokesman said there will only be a small representative office in the Netherlands. However, a corporate office in London will house “central functions” of the company, the spokesman said. The number of employees that will work in London and the number of employees stationed there is still a “work in progress.”
Fiat also announced Friday that Fiat Chrysler Automobiles will have 10 board members after the merger transaction clears all of its regulatory hurdles.
They are: Fiat and Exor Chairman John Elkann, Fiat and Chrysler CEO Sergio Marchionne, Exor board member and Juventus Football Club chairman Andrea Agnelli, Exor Vice Chairman Tiberto Brandolini d’Adda, Senior Advisor at Affiliated Managers Group Limited Glenn Earle, Valerie A. Mars, Brown University President Ruth J. Simmons, Teachers Insurance and Annuity Association Chairman Ronald L. Thompson, member of the British House of Lords Baroness Patience Wheatcroft, Alpilles managing partner Stephen M. Wolf and Ermenegildo Zegna CEO Ermenegildo Zegna.
Both Fiat’s board of directors and Exor, an investment firm controlled by Fiat’s founding Agnelli family, favored the merger.
Exor, an investment fund controlled by the Agnelli family, currently owns 30.05 percent of Chrysler. Fiat and Chrysler disclosed last month that Exor’s voting power could rise to as much as 46 percent, but only if all existing shareholders opted out of the loyalty voting structure.