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Fiat Chrysler merger still on track

Fiat Chairman John Elkann -  Fiat Chrysler merger still on track

Fiat will spend less than the limit the carmaker set to buy shares from investors who opted to sell ahead of its merger with Chrysler Group, clearing a key hurdle before the deal can close.

Based on a preliminary tally, the total will not exceed the €500 million ($658 million) Fiat allotted, the company said today in a statement. Had the amount exceeded the company’s cap, the deal would have been delayed.

“I am delighted with these results,” Fiat Chairman John Elkann said in the statement. “We are now looking forward to the completion of this project.”

Fiat-Chrysler CEO Sergio Marchionne said: “I am reassured by the fact that the vast majority of our equity holders have remained loyal and committed shareholders. He said investor support is “of crucial importance as we embark on the execution phase, which will dramatically improve the market positioning of our group.”

Fiat shareholders have the right under Italian law to sell their shares because Fiat is moving its registered offices away from Italy.

Fiat said it was finishing a count of the number of shares for which cash exit rights had been validly exercised and would give final details by Sept. 4. Based on data received so far, Fiat said it calculated that the €500 million limit has not been exceeded.

“Fiat has determined that even if all remaining unmatched notices and unmatched confirmations were to be matched, the maximum number of shares for which cash exit rights have been validly exercised will yield an aggregate exposure that is below the cap,” it said.

Fiat said the merger is on track to close by the middle of October as planned. After shareholders approved the merger on Aug. 1, investors opposing the plan were allowed to the sell their stock to Fiat at 7.727 euros per share. The company’s stock rose as much as 3.5 percent and was up 2.5 percent at 7.63 euros at 9:16 a.m. in Milan trading.

Earlier this month, the shares fell to their lowest level in 2014 on concerns that too many investors would demand cash, which would have forced Fiat to delay the combination until a new shareholder meeting takes place. The stock has traded below Fiat’s withdrawal price ever since the deal was approved.

Fiat is combining with Chrysler to create what the company estimates is the world’s seventh-largest automaker as it seeks to better compete with heavyweights including General Motors Co., Volkswagen and Toyota. The new entity, Fiat Chrysler Automobiles NV, will have its head office in London and its main stock listing in New York.