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Fiat merges with Chrysler

Fiat merges with Chrysler

Posted by Liliana Castaño on August 01, 2014

Fiat SpA, Italy’s largest manufacturer and a symbol of the country’s struggle to adapt to globalization, is leaving home after 115 years.

The controlling Agnelli family and other investors, holding their final shareholders meeting in Turin on Friday, sealed the end of Fiat as an Italian company with a vote approving a merger with Chrysler. Created by Italian-Canadian CEO Sergio Marchionne, Fiat Chrysler Automobiles NV will be incorporated under Dutch law, based in the United Kingdom and listed on the New York Stock Exchange.

“Marchionne doesn’t want to abandon Italy; he wants FCA and himself to be global players, and the center of gravity of FCA has to be repositioned in order to do that,” said Erik Gordon, a professor at the University of Michigan’s Stephen M. Ross School of Business. “It is a little sad for Italy.”

The new entity’s cosmopolitan structure reflects an auto-industry shift away from national champions like Fiat, which for decades prided itself on its Italian and Turin heritage. By combining resources with the U.S. carmaker, the company formerly known as Fabbrica Italiana di Automobili Torino can better compete with heavyweights like General Motors Co., Volkswagen AG and Toyota Motor Corp., Marchionne says. A brush with bankruptcy a decade ago proved the Italian focus was unsustainable.

“Marchionne needs the lights of Wall Street,” where Fiat Chrysler plans to locate its primary listing by mid-October, said Vincenzo Longo, an investment strategist at IG Group in Milan. There’s more opportunity there than a “peripheral place like what the Italian market has become.”

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