Fiat Owner Sells Stake in Swiss Firm
By REUTERS
Published: June 3, 2013
MILAN — The holding company that controls 30 percent of Fiat said on Monday that it had sold its stake in a Swiss company, a move analysts said was to help prepare for Fiat’s eventual purchase of the rest of Chrysler.
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The holding company, Exor, which is run by a member of Fiat’s founding Agnelli family, said it had sold its 15 percent stake in SGS, a Swiss inspection and testing company, to the Belgian conglomerate Groupe Bruxelles Lambert for 2 billion euros, or $2.6 billion.
Investors saw the move as connected to Fiat’s plan to buy the Chrysler shares it did not already own, an acquisition that is likely to cost about $4 billion but whose final bill has not yet been determined.
Fiat has steadily increased its ownership in Chrysler since an alliance between the two automakers was announced in 2009. It now holds 61.8 percent of Chrysler.
The chairman of Exor and of Fiat, John Elkann, signaled his determination last week that Exor’s stake in Fiat would not be watered down in the Chrysler merger, which Fiat’s chief executive, Sergio Marchionne, has said may be partly financed by a share issue.
Mr. Elkann, a descendant of the Fiat co-founder Giovanni Agnelli, whose family has owned the Italian carmaker since 1899, was quoted as saying that Exor would use 1.2 billion to 1.3 billion euros already on its balance sheet to retain its interest once Fiat and Chrysler were merged.
“This transaction could seem like Exor wants to raise cash ahead of an investment in Fiat-Chrysler, in the event that Fiat needs to bolster its equity as it brings its stake in Chrysler to 100 percent,” Luca Arena, an analyst at the Istituto Centrale delle Banche Popolari Italiane in Milan, wrote in a note.
Exor, which also controls the truck maker Fiat Industrial, had been an investor in SGS for 13 years. It said it had purchased the stake for about 500 million euros.
Despite the prospects for a capital increase, Fiat shares held on to last week’s gains and closed on Monday at 6.32 euros, their highest level since August 2011.
When companies announce a capital increase, their shares usually fall as investors anticipate the cost of taking part or the risk of being diluted, but some analysts say Fiat’s recent resilience shows support for the Chrysler deal.
