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Merger mechanism makes Chrysler equal partner

by Bill Cawthon on

On Sunday, Fiat S.p.A.’s board of directors voted to approve the merger of Fiat into its wholly owned subsidiary Fiat Investments N.V. The Netherlands-based company will be renamed Fiat Chrysler Automobiles N.V. (“FCA”) upon completion of the merger, when FCA will become the holding company for the group.

The board also approved an internal reorganization: Fiat will acquire all interests in Fiat North America (FNA), the U.S. subsidiary that owns Chrysler Group, from Fiat Group Automobiles S.p.A (“FGA”).

This change brings Fiat North America and Chrysler under the direct control of Fiat SpA (the parent organization), and simplifies the corporate structure. It separates American-based Chrysler from Italian-based Fiat Group Automobiles, and paves the way for the two automakers to have equal stature in FCA.

FCA is to have a voting system that gives more power to long-term shareholders — stock with is held for at least three years gives the owner double the normal amount of votes. This will both prevent corporate raiders such as Carl Icahn or Kirk Kerkorian from applying undue pressure, and increase the power of the Agnelli family, which still owns 30% of the company after founding it over a hundred years ago.

The plan will be submitted for final approval by Fiat shareholders at an extraordinary general meeting expected to scheduled in the third quarter of 2014.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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