Canadian Manufacturing

Fiat shares slammed by Chrysler merger concerns

Italian law giving dissenting shareholders the right to cash out could cause a short-term roadblock to the merger between global auto giants

MILAN—Fiat Group shares have been suspended temporarily after an excessive drop due to investor concerns that a planned merger with Chrysler may be blocked.

Fiat shares slid seven per cent to 6.34 euros in Milan trading June 5.

Shareholders voted to approve a merger with Chrysler, which will move the new company’s centre of gravity abroad with a American listing, British tax home and Dutch legal headquarters.

One important hurdle remains: Italian law gives dissenting shareholders the right to cash out.

The market drop reflects concerns that the payout, which has been set at 7.727 euros a share to reflect Fiat’s recent average share price, will exceed Fiat’s 500 million-euro cap. If it does, it would derail the merger at least temporarily.

The cash-out period ends in 14 days.

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