Detroit-based Chrysler has been absorbed by Italian car company Fiat to form a new, global car company: Fiat Chrysler Automobiles (FCA).
The board of directors of Italy’s Fiat, which completed its acquisition of Chrysler earlier this year, announced the formation of the new company at the end of January. It said the company (FCA) will be incorporated in the Netherlands and registered in the United Kingdom for tax purposes, but will continue to be run by a management team working out of Fiat’s headquarters in Turin and Chrysler’s headquarters in Michigan.
As reported by Detroit News, Fiat’s shares will convert into stock in the FCA, which will continue to trade on the Mercato Telematico Azionario in Milan, but the company also plans to begin trading shares on the New York Stock Exchange by October.
“A new chapter of our story begins with the creation of Fiat Chrysler Automobiles,” said John Elkann, chairman of Fiat, in a statement released Wednesday. “A journey that started over a decade ago, as Fiat sought to ensure its place in an increasingly complex marketplace, has brought together two organizations, each with a great history in the automotive industry and different but complementary geographic strengths.”
Chrysler’s iconic Pentastar logo will not be part of that new chapter. Both it and the Fiat logo will be replaced with a new corporate insignia — the stylized letters F, C and A — over the next several months.
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It is the second time the Pentastar has fallen in the past 15 years. Daimler-Benz AG replaced it with an older Chrysler logo when it acquired control of the company in 1998. The Pentastar was revived after the German automaker sold Chrysler to Cerberus Capital Management LP in 2007.
Fiat acquired a controlling stake in a bankrupt Chrysler in 2009 as part of a bailout deal brokered by the Obama administration. Since then, the Italian automaker gradually increased its stake in the company, culminating in a Jan. 1 deal to acquire the remaining shares from a United Auto Workers retiree health care trust.
“(Today) we have closed a remarkable chapter in Chrysler’s proud history,” CEO Sergio Marchionne said in a message to Chrysler workers Wednesday. “Your courage and passion have restored Chrysler to being a competitive force in the auto industry and have created a strong partner with Fiat in building an exciting new global venture.”
Marchionne told analysts and reporters that the plan approved by Fiat’s board will remove “all the complexity of trying to run two separate organizations with two separate governance systems” and allow him to create “the world’s seventh-largest automaker” — one with the scale and scope necessary to compete in the global automobile business.
The decision to incorporate the newly merged company in the Netherlands was widely anticipated, and executives stressed that it would have no impact on employment in Auburn Hills or Turin. They pointed out that Chrysler, like many American corporations, was actually headquartered in Delaware.
Claiming tax residency in the United Kingdom is an increasingly common practice because it offers more streamlined accounting rules for foreign-controlled companies. FCA will continue to pay taxes in the United States and other countries in which it does business.
“This is the trend of the future. It is more and more the shape of business today,” said professor Aneel Karnani of the University of Michigan’s Ross School of Business. “Companies are losing this idea of a nationality. Saying what country a company is from is becoming more and more difficult and ambiguous.”
