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Fiat board makes Chrysler merger official, approves $5.4B bond sale

Fiat's board of directors has officially approved the merger plan that will see the conglomerate's automotive operations merged with Chrysler into the new Fiat Chrysler Automobiles.
The plan essentially provides a road map for the structure of the new company. It includes provisions for Fiat shareholders - one Fiat share will translate to one share of FCA common stock. The new company will also include a loyalty voting structure, which will provide for shareholders of Fiat stock or those that have held FCA stock for at least three years. According to the plan, these shareholders would see their voting power double, with two votes for every share of FCA's common stock. The overall merger plan still needs to be approved by the company's shareholders.
In other Fiat-related news, the company's board has announced a bond issuance of four billion euro ($5.4 billion). The new bonds should provide the company with a degree of flexibility in refinancing debts associated with the merger plan.

Fiat and UAW back at negotiating table over Chrysler stake

We knew there'd be no Chrysler IPO before the end of this year, but Fiat is determined to get the best run going into 2014 and is back at the poker table with the UAW. The delay was said to be Chrysler's desire to clean up a tax issue with the IRS; turns out that also bought the carmaker time to try and close a deal for the UAW's 48.5-percent stake in the company before the IPO happens.
Whereas the price Chrysler was willing to pay was once more than $1 billion under the UAW's asking price, the gap has closed to just $800 million of late. A recent valuation of the company at $10 billion - a valuation the UAW has disputed - means Fiat would be looking to pay about $4.2 billion instead of the $5 billion that the UAW seeks. But the UAW needs to hold out for the highest amount it can get because its pension obligations through the Voluntary Employee Benefit Association (VEBA) are $3.1 billion greater than the VEBA's assets, which include the Chrysler stake.
There's a clause in the agreement that Fiat can buy the VEBA shares for $6 billion, but Fiat CEO Sergio Marchionne has said that the UAW "should buy a ticket for the lottery" if they even want $5 billion. The UAW, though, has more time to wait; it's Fiat that wants access to Chrysler's $11.9-billion war chest and that would like to avoid the risk of paying the full $6 billion for the UAW share if the float really takes off. With other valuations of Chrysler as high as $19 billion, a hot IPO could make that $6 billion look like a bargain.

Ferrari stock demand exceeding supply

As with the Ferrari cars, so it is with shares in the company's initial public offering: When Ferrari has a limited quantity of something to sell, demand far outstrips supply. Investors told banks weeks ago that bids for the $1 billion in stock – up to 18.89 million shares – would exceed the number of shares available over the entire expected range of $48 to $52. Ten percent of the company is going on the block' Bloomberg reports that the books close on the IPO on Monday at 4:00 pm. The final price will be set on Tuesday, and trading will begin Wednesday under the ticker symbol RACE on the New York Stock Exchange. Piero Ferrari, the son of Enzo Ferrari, will hold onto the ten-percent stake he currently has in the company. Fiat Chrysler will disburse the final 80 percent to its investors sometime in 2016. In combination with spinning Ferrari off from its parent company next year, the share sale is expected to put $4 billion into Fiat Chrysler coffers, which will be used to help fuel the growth of Alfa Romeo, Jeep, and Maserati. Assuming all goes to plan, Bloomberg says Ferrari will be valued at roughly $12 billion, a number $1 billion greater than the valuation Fiat Chrysler CEO Sergio Marchionne put on Ferrari earlier this year and higher than the brand's own internal assessment. Related Video: