03.01.2011 SPLIT FIAT GROUP COMPANIES BEGIN TRADING ON THE MILAN STOCK EXCHANGE

FIAT PANDA

A new era began on the Milan stock exchange this morning as "Fiat" and "Fiat Industrial" shares began trading separately for the first time, finally shutting the door on the powerhouse industrial conglomerate, Italy's largest company, which was incorporated on July 11, 1889 by Giovanni Agnelli.

A new era began on the Milan stock exchange this morning as "Fiat" and "Fiat Industrial" shares began trading separately for the first time, finally shutting the door on the powerhouse industrial conglomerate, Italy's largest company, which was incorporated on July 11, 1899 by Giovanni Agnelli. As a result of the split, the automotive division, including the stake in the Chrysler Group, and related supply sectors have been separated from the CNH Global and Iveco units.

Splitting up the "empire" has long been touted but until the passing away of former Fiat Chairman Gianni Agnelli, a colossus who moulded the Fiat Group into a global player, it was never a possibility. With the sum of the parts always worth more than the total, the idea of unlocking value, and in turn creating lucrative profits for financial institutions and shareholders alike, would always come to pass one day. Fiat shares have risen by a half over the last year as investors have bought into the proposal to split it into two companies. Traditionally around a 20-25 percent discount has been built into Fiat shares thanks to its conglomerate status.

The diversion of attention into the splitting the group has also helped to mask Fiat's problems during a period when it is also trying to integrate many of its automotive industrial functions with the Chrysler Group, itself trying to return to profitability after emerging for a bruising bankruptcy process in the summer of 2009. "In the face of major developments in the market, we could not continue to keep together two sectors that do not have any economic or industrial tract in common," Marchionne said today, reported Reuters, at a special event at the Milan bourse to mark the dual listing. "The demerger will allow Fiat and Fiat Industrial to focus on their own business. Each will be able to follow its own path," he added.

Marchionne also said that Fiat is most likely to raise its stake in Chrysler Group to 51 percent but claimed that he has no plans at present to merge the two companies. Fiat currently owns a 20 percent stake in the U.S. automaker and can raise that further through a series of increments subject to hitting laid down targets. "If Chrysler is listed this year, we should think about speeding up the option of increasing our stake," Marchionne was quoted by Reuters as saying today.

"I have no plans to merge Fiat and Chrysler today," Marchionne also said today, reported Reuters. "I think we have done a relatively decent job in the last 18 months" in terms of industrial integration of Fiat and Chrysler, he said, adding that "a legal merger is not going to change our lives."

The new Fiat Industrial entity meanwhile, which encompasses agricultural and construction equipment maker CNH Global and trucks and buses division Iveco as well as some industrial units of Fiat Powertrain Technologies, has been handed substantial Fiat Group debt onto its new balance sheets but is expected to attract interest and is likely to be broken up or taken over in the near future. Fiat itself will have to seek ways to raise cash to increase its stake in Chrysler and an IPO of Ferrari is considered a favourite option. A sale of Fiat's Magneti Marelli lighting and electronic components division has also been touted in recent months but as this is an almost captive division it isn't clear how this could be achieved.
 

2011 Interfuture Media/Italiaspeed