Likely U.S. listing to further sideline Italy in Fiat-Chrysler group

Sun Jan 5, 2014 12:16pm EST
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By Agnieszka Flak and Deepa Seetharaman

MILAN/DETROIT (Reuters) - Chief Executive Sergio Marchionne's merger of carmakers Fiat and Chrysler will probably entail a U.S. share listing that cements North America as the group's new centre of gravity and further sidelines Italy.

Two sources close to Fiat said it was likely to move its primary listing to New York as early as 2015 after a merger with Chrysler, the third-largest U.S. automaker, heralding a politically delicate shift of focus that reflects the operating facts.

Chrysler already made more than half the group's first-half revenue, turning what would have been a 501 million euro ($690 million) loss for Fiat alone into a 435 million euro profit, while Fiat plants in Italy tick along at just 41 percent capacity, according to 2013 estimates from IHS Automotive.

A listing move would help Marchionne distance himself from troubles in Europe, where thousands of Fiat's Italian workers are on state-backed temporary lay-off schemes, highlight its gains in the United States and convince a larger pool of investors that the merged company can take the fight to rivals General Motors and Ford Motor Co.

"With a U.S. listing, the whole investment story and the way in which people think about this company may change," said International Strategy and Investment analyst George Galliers.

"Today people think of Fiat as a weak European player with a good exposure to South America and exposure to North America through Chrysler," he added. "Once you have a U.S. listing, people are more likely to think of the entity in the same context as they do Ford and GM."

While the northern Italian city of Turin has been Fiat's seat for the past 115 years, "the brain and muscles are in the United States; the centre of gravity has moved to the other side of the ocean", Luciano Gallino, a sociologist who specializes in labor market changes, was quoted by ANSA news agency as saying.

The listing and the likely establishment of a group headquarters outside Italy will alarm some in that country's government and unions who want to protect jobs, but it will delight investors who want cost cuts and closures, observers said.   Continued...

Fiat Chief Executive Sergio Marchionne poses during a visit at the carmaker's Sevelsud plant in Atessa, central Italy, July 9, 2013. REUTERS/Remo Casilli