Fiat pursues 100% of Chrysler

Fiat SpA took a step closer to a full merger with Chrysler Group LLC after the Italian carmaker's shareholders approved a simplified capital structure with the creation of a single class of common stock, The Detroit News reported.

Fiat is interested in getting "100 percent" of Chrysler, Sergio Marchionne, who runs both automakers, told reporters in Turin on Thursday after Fiat's annual shareholders meeting. "The mechanism is subject to negotiations and market conditions," while it's "highly unlikely" the merger will occur this year, he said.

Fiat owns 58.5 percent of Auburn Hills-based Chrysler and Marchionne plans to combine the two manufacturers to boost sales to more than 100 billion euros ($132 billion) by 2014 and form a global player out of the regional carmakers. Marchionne reiterated that Fiat may buy another 3.3 percent of Chrysler in the second half if it exercises options held on the stock.

The Italian manager, who grew up in Canada, is counting on Chrysler to propel growth at Turin-based Fiat, whose volume brands lost about 500 million euros in Europe last year as the region's debt crisis caused consumers to hold back on purchases. The Italian carmaker relied on Chrysler for all of its net income in 2011 as U.S. sales surged.

Fiat investors voted Thursday in favor of converting savings and preferred shares into common stock. The shift will be a "means of preparing for a potential merger with Chrysler," Marchionne said on Oct. 28. Investment firm Exor SpA, which controls the Italian carmaker, supported the plan.

The Italian manufacturer must first reach a deal with the United Auto Workers on what to do with the 41.5 percent Chrysler stake held by the union's retiree health-care trust, VEBA. Fiat has the right to buy the entire holding for $4.25 billion, plus 9 percent annual interest calculated from January 2010. The current market value of the VEBA stake is "well below" that price, Marchionne said.

Fiat also holds an option to acquire part of the stake beginning in July at a price based on Chrysler's earnings, which Marchionne said would allow Fiat to raise its holding to 61.8 percent this year.

Fiat has no plans to spin off its luxury units Ferrari SpA and Maserati, Marchionne added.