Fiat weighs New York listing following merger with Chrysler, report says

MILAN/NEW YORK (Bloomberg) -- Fiat may retreat further from its heritage by selecting New York as the primary exchange for its stock after a planned merger with Chrysler Group.

CEO Sergio Marchionne is evaluating the Italian automaker's switch from the Milan exchange as the carmaker's revenue and profit center shifts to the United States, said the people familiar with Fiat's financing plan, who asked not to be named as the matter is private. Fiat may keep Milan as a secondary listing, another person said.

A Fiat representative declined to comment.

While no final decision has been made and other possibilities have been considered, the move would be highly political and symbolic for debt-ridden Italy as it struggles to emerge from a humbling cycle of recessions.

Fiat is a key part of Italy's commercial fabric. Its name is an acronym for Fabbrica Italiana Automobili Torino, or Italian Car Factory of Turin. The company, pushed by the Agnelli industrial family, played a significant role in Italy's emergence as a manufacturing power after World War II.

"Italy and Turin should understand that the old Fiat, as we knew it, doesn't exist anymore," said Giuseppe Berta, a Fiat historian and business professor at Milan's Bocconi University. "The carmaker now has the U.S. as its biggest market, so I would be surprised if Marchionne doesn't choose the New York Stock Exchange.

Marchionne, who runs both Fiat and Chrysler, plans to combine the two manufacturers to forge a global automaking group to challenge General Motors Co. and Volkswagen.

Fiat is looking to buy the rest of Chrysler after accumulating a 58.5 percent stake since taking control in 2009 as the U.S. company emerged from bankruptcy.

Chrysler has become the group's cash machine as Fiat struggles to end losses in Europe, which totaled more than 700 million euros ($908 million) last year. Fiat generated 75 percent of 2012 operating profit in North America.

"It makes a lot of sense for Marchionne to list Fiat-Chrysler in the U.S.," said Erich Hauser, an analyst for Credit Suisse. "Refinancing costs are typically lower and aren't so much subject to the funding costs of sovereign bonds. Also, manufacturers tend to get higher multiples."

Before the listing decision can be finalized, Fiat first has to buy the remaining 41.5 stake owned in Chrysler from United Auto Workers retiree health-care fund, or VEBA. The two sides are in court disputing the price for part of the shares that Fiat is seeking to buy under options held by the Italian company.

Marchionne expects a Delaware court to decide on the issue by the end of June. The resolution of the court case would help him provide "clarity" on the merger by the end of the year, he said earlier this month.

Italy-born Marchionne, 60, who grew up in Canada, has made it clear that the U.S. is an option to improve access to investors. Fiat "should somehow look at the U.S. market for its possible benefits," Marchionne said March 19 in Geneva when asked if he would move the company's main listing of the combined entity to the U.S.

"Fiat has opened itself up fundamentally and irreversibly to the outside world," he told investors at the April 9 general meeting.

The Agnelli family, which still controls Fiat through its holding company Exor SpA, has already agreed to move Fiat Industrial's headquarters outside Italy after a combination with its CNH division. The capital goods company that Fiat spun off in 2011 is planning to merge with its farm-equipment division CNH Global NV and use CNH's listing in NY for the combined entity.

"Our heart and our head are in the many regions where we operate," John Elkann, Exor chairman and head of the family, told reporters in Milan this month, when asked if Fiat will keep its headquarters in Turin after the merger with Chrysler.