FIAT, Italy’s largest manufacturer, will be leaving its home after 115 years to merge with Chrysler and appease its global aspirations.
The Agnelli family, who control FIAT, and other investors met Friday in Turin to vote on the fate of the Italian company. The shareholders have voted in favour of a merger with Chrysler, which has been in the works for five years.
The approval will allow the formation of FIAT Chrysler Automobiles NV, which is expected to come about by mid-October. The company will be incorporated under Dutch law and listed on the New York Stock Exchange, with its fiscal home being in the United Kingdom.
By combining resources with Chrysler, FIAT can compete with other major players in the car market, such as General Motors, Volkswagen and Toyota.
After a brush with bankruptcy 10 years ago, FIAT’s Chief Executive Sergio Marchionne began a search for a partner in order to move away from the Italian market.
In 2009, Marchionne helped rescue Chrysler during the U.S. recession and turned the U.S. market into a firm profit centre for FIAT. The North American market earned 62 per cent of the company’s second-quarter operating profit this year. Without the U.S. division, FIAT would have been unprofitable for 2012 and 2013.
Marchionne completed the buyout of Chrysler earlier this year in preparation for this upcoming merger. FIAT now plans to invest 55 billion euro (about $70 billion) over the next five years to boost deliveries 61 per cent to seven million units by 2018. This merger will free up the necessary funds to do this.
