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

August 6, 2014  by The Associated Press

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.

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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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