Fiat SpA will spend less than the limit it set to buy shares from investors who opted to withdraw before the automaker merges with Chrysler Group, clearing a key hurdle before the deal can close, Bloomberg News reported on Friday (29 August).
Based on a preliminary count, the total won’t be more than the EUR500m (US$658m) Fiat allotted, the Turin-based company was quoted as saying today in a statement. Had the amount exceeded the company’s cap, the deal would have been delayed. The final sum of withdrawal rights will be announced by 4 September, according to Bloomberg.
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“I am delighted with these results,” Fiat Chairman John Elkann said in the statement. “We are now looking forward to the completion of this project.”
Fiat is combining with Chrysler to create what the company estimates is the world’s seventh-largest automaker. The new entity, Fiat Chrysler Automobiles NV, will be based in London and have its main stock listing in New York.
Fiat said the transaction was on track to close by the middle of October as planned. After shareholders approved the merger on 1 August, investors opposing the plan were allowed to the sell their stock to Fiat at EUR7.727 a share, Bloomberg added.
Shares earlier in August fell to their lowest level in 2014 on concerns that too many investors would demand cash, which would have forced Fiat to delay the combination until a new shareholder meeting took place. The stock has traded below Fiat’s withdrawal price ever since the deal was approved, Bloomberg noted.
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By GlobalDataFiat said it recognized exit rights that were validly exercised but, according to the report, the firm now needs to wait for potential opposition from creditors. That period expires on 4 October and the company said on Friday it doesn’t expect this process to interfere with the closing of the deal.
“I am reassured by the fact that the vast majority of our equity holders have remained loyal and committed shareholders,” chief executive officer Sergio Marchionne said in the statement.
Investor support was “of crucial importance as we embark on the execution phase, which will dramatically improve the market positioning of our group.”
