Tag Archive | "New York Stock Exchange"

Fiat Chrysler’s Wall Street Debut Draws Muted Response

Investors cautiously greeted the Wall Street debut on Monday of Fiat Chrysler Automobiles (FCA), a move that shifts the carmaker’s center of gravity away from Italy and caps a decade of canny dealmaking and tough restructuring by Chief Executive Sergio Marchionne, reported Reuters.

“We’re finally taking Chrysler back” to the U.S. stock market, Marchionne said Monday on the floor of the New York Stock Exchange. “One of the Detroit Three is coming home.”

Investors in the United States and Europe approached the new listing gingerly, as analysts expressed reservations about the company’s prospects.

FCA shares opened at $9.00 in New York and rose as high as $9.55 before closing at $8.92, up 2.5 percent from a Friday close of $8.70 for the predecessor company Fiat SpA. In Milan, where FCA will keep a secondary listing, shares rose more than 4 percent during the session and closed up 1.2 percent.

Trading was muted, with about 5.8 million shares changing hands on the NYSE.

Marchionne rang the closing bell at the NYSE on Monday to mark the milestone for the 62-year-old CEO who revived one of Italy’s top companies and helped rescue Chrysler along the way.

The world’s seventh-largest auto group sought the U.S. listing to help establish itself as a leading global player through access to the world’s biggest equity market and the cheaper, more reliable source of funding it ultimately offers.

Marchionne on Monday said FCA might raise debt funding to help finance its $60-billion five-year investment plan.

Fiat took management control of bankrupt Chrysler in 2009 and completed its buyout this year. It is now combining all of its businesses under Dutch-registered FCA, which will have a UK financial domicile and small London headquarters, with operations centers in Turin and Detroit.

But Marchionne has picked a difficult moment to woo U.S. investors. Analysts think U.S. car sales are nearing a peak, while Europe is struggling to recover from years of decline and growth in China and Latin America has slowed.

“Only those willing to accept the risks of a highly leveraged turnaround situation in a competitive, capital-intensive, highly cyclical industry should consider investing,” Richard Hilgert, an analyst at Morningstar, said in a note.

IHS Automotive, a leading industry research firm, said on Monday that it expects FCA will miss Marchionne’s aggressive sales targets for the company as a whole and several of its brands, including Jeep and Alfa Romeo.

IHS “does not currently expect this plan to succeed,” said analyst Ian Fletcher in a midday note.

The company has projected a 60 percent boost in sales to 7 million vehicles and a fivefold increase in net profit to as much as $6.9 billion by 2018, the year Marchionne has said he would step down as CEO.

IHS is forecasting more modest growth, to 5.1 million sales in 2018.

Marchionne said “I have all the best intentions” of nearly doubling global Jeep sales to 1.9 million by 2018, but that FCA needs to boost annual China sales of Jeep to 500,000 to meet that target. A second Jeep assembly plant in China will open in 2016, he said.


In comparison with GM and Ford, FCA is seen as less attractive because of its aging model line-up, high debt, weaker margins in North America and small presence in China.

“Ford and GM offer much stronger cash generation and balance sheets, and are thus in a position to return cash to shareholders, while FCA still needs to raise capital,” Exane BNP Paribas analyst Stuart Pearson said in a note.

Marchionne hopes to see more than half of FCA stock changing hands in New York instead of Milan, but appetite will take time to build, especially as FCA has yet to switch to U.S. accounting principles and to reporting results in dollars.

Marchionne will hit the road next month to spread the word. He believes FCA’s cause will be aided by Chrysler’s brand strength in the United States, now the main profit center for the combined group.

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Fiat May Sell Up To $1.04B In Stock With U.S. Listing

Fiat SpA may sell as much as $1.04 billion in shares to reduce debt and gain local investors after the carmaker formed from merging with Chrysler Group LLC lists stock in the U.S., according to Bloomberg News calculations, reported The Detroit News.

The company may have as many as 104.2 million shares available for sale when the newly created Fiat Chrysler Automobiles NV starts New York Stock Exchange trading later this year, based on cash-exit rights investors have exercised and earlier plans to dispose of treasury stock. At the current share price, that would be valued at 801 million euros ($1.04 billion).

Chief Executive Officer Sergio Marchionne is combining Turin, Italy-based Fiat with its U.S. division to establish a manufacturer with the scale to compete with auto-industry leaders such as General Motors Co., Volkswagen AG and Toyota Motor Corp. Marchionne told Bloomberg News on Aug. 30 that stock submitted by shareholders who don’t want to be part of the merged company will probably be sold following the shift to U.S. trading “to create liquidity.”

Investors withdrawing from Fiat prior to the merger submitted 60 million shares, valued at about 463.6 million euros at the exit price of 7.727 euros a share, the company said today.

The stock will be offered to other Fiat shareholders at that price for about a month starting tomorrow, after which the carmaker will buy any shares that are unsold. Investors owning Fiat stock as of Sept. 9 will be eligible to buy one exit-program share for every 19.35 already held, Fiat said in a separate statement.

The buyout value was 7.3 percent less than the 500 million euros that Fiat had budgeted. Fiat’s stock reached a low for this year in early August amid investor concern that the cap would be exceeded, delaying the transaction.

Marchionne said in June that Fiat also plans to sell the stock it holds in treasury. That amounts to a little less than 44.2 million shares, or 3.5 percent of the total.

Fiat rose 1.4 percent to 7.69 euros at the close Thursday in Milan, the highest price since July 25. The stock has gained 29 percent this year, valuing the carmaker at 9.6 billion euros. Fiat declined to comment on the potential stock-sale figure.

Shares in Fiat will be converted on a one-to-one basis to Fiat Chrysler stock when the listing shifts to New York. Marchionne said last week that U.S. trading may begin as early as Oct. 13. Fiat Chrysler will set up its headquarters in London.

The merged company’s new board will meet in late October and evaluate its capital structure, including weighing whether to sell new shares.

Marchionne said last week that he “learned a lot” from the creation of CNH Industrial NV, the truck and tractor company that separated from Fiat in 2011 and moved its listing to New York last year.

“The problem with the U.S. market is that there is no liquidity in CNH, so we need to fix that” for Fiat Chrysler, he said.

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Fiat-Chrysler Sees New York Stock Market Listing on October 13

Fiat-Chrysler aims to list shares in the newly merged carmaker in New York on Oct. 13, Chief Executive Sergio Marchionne said on Saturday, adding that a decision on any capital increase would be made at the end of that month, reported Reuters.

He was speaking a day after the merger between Fiat and its U.S unit Chrysler cleared its last remaining hurdle.

Fiat bought out Chrysler at the start of 2014 and both operate as one firm. Marchionne wants to incorporate the two into Dutch-registered entity Fiat Chrysler Automobiles (FCA), paving the way for the U.S. listing he says is needed to help finance a 48-billion euro ($64 billion) five-year growth plan.

“The most likely date for the listing in the U.S. is October 13,” he told reporters on the sidelines of a meeting in Rimini.

Marchionne is counting on the merger and the listing to help pay for a relaunch of its Alfa Romeo and Maserati brands, export Jeeps globally, and take all three to fast-growing Asian markets, where the group is currently weak.

Marchionne said the five-year business plan for the world’s No. 7 auto group presented in May did not envisage a cash call.

“But all decision on any capital increase will be taken by the board of FCA at the end of October,” he said. He also confirmed the group’s full-year guidance for 2014, adding the U.S. market was going “incredibly well.”

Targets to grow net profit five-fold and sales by 60 percent within five years look ambitious, some analysts say, arguing that the company will have to raise capital to achieve them.

Fiat had 18.5 billion euros of cash at end-June, but almost 32 billion in debt. Its financing costs are high and margins are weakening.

Fiat had so far ruled out asset sales and a share issue, but may go for a mandatory convertible bond. Marchionne had previously said any decision on financing would only be taken after FCA was created.

The merger plan could have failed if the carmaker had been asked to pay more than 500 million euros ($658 million) to dissenting investors who tendered their shares, exercising a legal right triggered by Fiat’s decision to move its registered offices away from Italy.

Fiat said on Friday it was finishing a count of shares for which cash exit rights had been validly exercised, but it could already say that the 500 million euro limit would not be exceeded, based on data calculated so far.

It plans to publish the final count by Sept. 4.

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Fiat Chrysler Stock to List on NYSE in August

Fiat Chrysler Automobiles has disclosed in a filing with Securities and Exchange Commission that it is prepared to list 750.5 million shares on the New York Stock Exchange once its shareholders finalize the takeover of the Chrysler Group, reported The Detroit Bureau.

Despite completing the acquisition of Chrysler stock earlier this year, FCA will not exist legally until shareholders vote to approve the merger August 1 during a special meeting. The prospectus filed by FCA said it intends to begin trading its stock on the first day following the merger.

The FCA common shares will be listed on the NYSE and also are expected to be listed on the principal Italian stock exchange in Milan, the Mercato Telematico Azionario, or MTA, pending the approval of authorities in Italy and the Netherlands where the new company will be chartered. FCA has already set up its headquarters in London and will use Chrysler’s home in Auburn Hills and Fiat’s base in Turin as its operational headquarters.

The listing on the NYSE and the MTA is intended to enhance liquidity in FCA shares and improve the Group’s access to additional equity and debt financing sources, while preserving current shareholders’ access to Fiat’s historic trading market, according to the SEC filing.

“With a NYSE listing, FCA will seek to attract interest among U.S. investors seeking to gain exposure to an enlarged group with significant operations in, and market exposure to, North America,” the company said in a statement. But by maintaining a listing in Italy, it said it expects to, “facilitate continued engagement by a pan-European investor base, while at the same time reducing the risk of flow-back of shares held by Italian retail investors.”

However, the prospectus also cautioned the liquidity in the market for FCA common shares may be undermined by trading in two markets at least in the short-term and could result in price differentials of FCA common shares between the two exchanges.

Fiat shareholders will vote on the merger plan that calls for current Fiat shareholders to receive one share of Fiat Chrysler Automobiles for each share of Fiat. Most current shareholders also will be eligible for a second voting share that is designed to reward Fiat shareholder for their loyalty, effectively giving them two voting shares.

Trading will not begin until at least 60 days after the shareholder meeting and after the Dutch and Italian regulators, as well as the stock exchanges, approve the transactions.

Fiat became Chrysler’s 100% owner in January when it agreed to pay $4.35 billion for the 41.5% of the Auburn Hills automaker held by the UAW Retiree Medical Benefits Trust, or VEBA.

Fiat and Chrysler CEO Sergio Marchionne is restructuring Fiat and Chrysler into a single corporate entity to shore up its finances and attract investors. Longer-term, FCA’s plans call for raising its credit rating to investment grade, making it less expensive to borrow money from banks.

Exor, an investment company controlled by Fiat’s founding Agnelli family, is currently the largest shareholder of Fiat. Exor owns 30.05% of Fiat and will likely hold the same interest in the new company.

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