Fiat may sell up to $1.04 billion in stock with U.S. listing to reduce debt
MILAN (Bloomberg) -- Fiat may sell as much as $1.04 billion in shares to reduce debt and gain local investors after the new company formed from merging with Chrysler Group lists stock in the U.S., according to Bloomberg News calculations.
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 today's share price, that would be valued at 796.4 million euros ($1.04 billion).
Fiat-Chrysler CEO Sergio 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.
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 as much as 1.1 percent and was trading up 0.9 percent at 7.65 euros as of 3:33 p.m. in Milan trading. The stock has gained 29 percent this year, valuing the carmaker at 9.57 billion euros.
The company 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.
Marchionne is combining Fiat with Chrysler to establish a manufacturer with the scale to compete with auto-industry leaders such as General Motors Co., Volkswagen Group and Toyota Motor Corp.