MILAN -- Fiat said reports that a significant number of its shareholders have exercised their exit rights over the company's merger with Chrysler were unfounded. A shareholders exit could potentially jeopardize the merger.
Fiat stock fell to a seven-month low on Tuesday, partially because of concerns over the merger, but also due to a press report in Chinese media regarding a competition probe targeting Chrysler's Jeep unit and other Western automakers in China.
Fiat's stock closed down 3.1 percent at 6.85 euros. The stock had been halted from trading earlier in the session and had slumped as low as 6.56 euros.
Two traders said the Fiat share price decline might be partly linked to concerns that shareholders who voted against the company's merger with Chrysler would exercise their right to sell the stock.
The merger of Fiat with Chrysler to create a new entity, Fiat Chrysler Automobiles NV, based in London and with its main stock trading in New York was approved by Fiat shareholders at a special meeting on Aug. 1 by a two thirds majority.
About 8 percent of all of Fiat's investors voted against the merger. Should enough of them exercise their rights to sell by Aug. 20, and the total sum that needs to be paid for those rights to shareholders and creditors exceed 500 million euros ($669 million), the merger could still fail, Fiat has said.
Fiat said: "These rumors are groundless. The term for the exercise of the cash exit rights has begun today and Fiat has not received any notices of exercise of the cash exit rights."
Technically the merger could fail if around 5 percent of all shareholders exercise their rights to sell out, a possibility that analysts and management consider remote.
Investors who wish to exit the company will be paid 7.727 euros a share.