FCAU - Fiat Chrysler Automobiles

[fareastwarriors]

http://www.nytimes.com/2013/09/25/business/fiat-chief-rolls-dice-on-market-and-chrysler-merger.html?ref=business&_r=0

 

Fiat Chief Rolls Dice on Market and Chrysler Merger

[jay21]

I've seen mentioned here what Fiat would do in a European nightmare scenario - distribute Chrysler and Ferrari to shareholders.

 

Now, whats the downside if, along with a nightmare European scenario, we have a nightmare North American scenario (deflation)?  Merged or not, would Chrysler/Fiat survive with the debt it has?

 

Thanks,

 

-CM

 

If we have deflation in NA, the only investment that may go up is Fairfax.  I just do not see how deflation occurs with all of these QEs going on and no inclination to stop them.

 

Packer

 

Chrysler cash $11.8b: http://www.sec.gov/Archives/edgar/data/1513153/000119312513332881/d554670d10q.htm

 

I think they are pretty safe.

 

Also, while I appreciate the focus on the downside, I agree with Packer here.  I see such a small chance of an Armageddon situation in the US that would cause Chrysler to go bankrupt.  Also, I think the economic backdrop of the auto industry is pretty favorable as discussed on this board.

[fareastwarriors]

Chrysler’s Owners Race for the Cliff

 

 

 

http://www.nytimes.com/2013/09/27/business/chryslers-owners-race-for-the-cliff.html

[Sportgamma]

If all else fails, Marchionne still has a standing agreement to pay about $6 billion for the stake. Should the IPO market point to a higher value than that, he could exercise his option to buy at the fixed price. If investors indicate the shares are worth less than that, Marchionne would only need to offer more than the market valuation to take control.

 

Marchionne, who said last week that he’s looking to pay less than $5 billion for the holding, expects the market to apply a minority discount on the stake, said one of the people, who asked not to be identified because the discussions are private. A representative of the Italian carmaker declined to comment. Matt Wood, a spokesman for the Chrysler Veba, didn’t respond to a voice message or e-mail.

 

 

So

 

A) They negotiate a price privately < 6 bn

B) They do the IPO

B1) Investors do not apply a minority discount = the stake is bought for 6 bn

B2) Investors do apply a minority discount ==> arbritagers come in and buy at the discount because they know of the implied call that Marchionna has + his desire to buy the stake? => stake is bought for 6 bn

 

What do you guys think of this IPO strategy??

 

How about this:

1. 16.6% of Chrysler gets IPO´d.

2. FIAT uses its call options to bring its ownerships 75.1%.

3. While the court settles the pricing of the call options, FIAT buys 4.9% of Chrysler in the open, bringing its holdings to 80% and thus gaining control over the cash flows.

[Phaceliacapital]

Can you direct me to the accounting standard for the 80% rule?

 

Thanks!

[Sportgamma]

Can you direct me to the accounting standard for the 80% rule?

 

Thanks!

 

http://www.mofo.com/files/Uploads/Images/1302-The-Acquisition-of-Control-of-a-United-States-Public-Company.pdf

 

Page 26:

For U.S. federal income tax purposes, two U.S. corporations can file a consolidated return for federal tax purposes if one corporation owns at least 80% of the voting power and value of the other corporation. Thus, if the acquiror acquires 80% or more of the voting stock of the target, it should be eligible to include the target in its consolidated federal tax return. Filing a consolidated return provides the benefit of allowing losses from one member of the consolidated group to offset income of other group members. In addition, dividend distributions received by the acquiror from the target are excluded from the acquiror’s income for purposes of computing the consolidated group’s taxable income.

 

In general, the target’s tax attributes (including tax basis in its assets) do not change following its acquisition. When a target enters a consolidated group, however, its existing NOLs incurred in taxable years prior to entrance are subject to limitations. Usually such NOLs can only be used against the income of the target itself or, if that target was part of another consolidated group that entered the acquiror’s group together, against the income of such target subgroup.

 

In addition, if the acquiror owns more than 80% of the stock of the target after the acquisition, the acquiror may exclude 100% of the dividends received from the target from its income, irrespective of whether it elects to file consolidated tax returns. If the acquiror owns less than 80% but more than 20% of the target’s stock, it will be entitled to deduct 80% of the dividends distributed by the target.

If the acquiror is foreign, dividends paid by the target will be subject to a 30% U.S. withholding tax. This withholding tax may be reduced or eliminated by an applicable tax treaty between the U.S. and the acquiror’s country of residence. Sales of the target’s stock by the acquiror generally are not subject to U.S. withholding tax.

[Phaceliacapital]

Thanks!

[phil_Buffett]

i have a lot of fiat Shares.

i believe fiat and the VEBA make a deal before the IPO. Last Minute.

[muscleman]

i have a lot of fiat Shares.

i believe fiat and the VEBA make a deal before the IPO. Last Minute.

 

What is your average cost?

I bought 15% around $5.9, and I had a 15% position in EXO. Perhaps I should have just put 30% into FIATY, but the price is a bit high now to make the switch. ::)

[phil_Buffett]

you are a lucky guy with this cost average and you definetly put more into it  :D. iam in at 7,15$ and 7,95$ so i was a Little late to the Party. but i think fiat is a good Investment still after the increase in Price. Pabrai have a few fiat Shares and likes it. at the  annual Meeting this year from him in California he played 4 fiat Commercials. Great Value Play.

[muscleman]

you are a lucky guy with this cost average and you definetly put more into it  :D. iam in at 7,15$ and 7,95$ so i was a Little late to the Party. but i think fiat is a good Investment still after the increase in Price. Pabrai have a few fiat Shares and likes it. at the  annual Meeting this year from him in California he played 4 fiat Commercials. Great Value Play.

 

I put more into it than you? Are you new to this board? Normally when people (Ericopoly, valuecfa etc) say they have "a lot" of something, it usually means 50-70% of their entire portfolio. I thought you meant the same. :)

[phil_Buffett]

yeah iam new to this board and glad to be here. when iam saying i have a lot of Shares it means 10-20% of my Overall Portfolio. i would love to have bought more at your cost Level. then i had a bigger Position.

[fareastwarriors]

Chrysler US auto sales top expectations

 

http://www.cnbc.com/id/101076356

 

 

 

Chrysler Group surprised auto industry analysts with a modest 1 percent increase in U.S. car sales in September.

 

Chrysler, an affiliate of Italy's Fiat, said it sold 143,017 vehicles, handily beating analysts' expectations.

[txlaw]

http://www.bloomberg.com/video/the-sexy-alfa-at-the-center-of-chrysler-s-fight-0DAlwx36TCqJvV3vDGkgZA.html

[brker_guy]

Ferrari Says Sales in Japan to Rise 30% as Abe Revives Spending

http://www.bloomberg.com/news/2013-10-08/ferrari-says-sales-in-japan-to-rise-30-as-abe-revives-spending.html

 

 

 

I think Asia needs to step up and buy more Ferrari. ;-)

[phil_Buffett]

http://www.reuters.com/article/2013/10/09/us-autos-chrysler-ipo-idUSBRE9981D520131009

[fareastwarriors]

Trust Estimated Chrysler Stake Value at $3.6 Billion

 

http://online.wsj.com/news/articles/SB10001424052702304106704579135833832929954?mod=WSJ_business_whatsNews

[Phaceliacapital]

http://www.4-traders.com/FIAT-SPA-69342/news/Fiat-SpA--Fiat-fails-to-get-quick-trial-in-Chrysler-stake-dispute-17362335/

 

 

September 2014...

[brker_guy]

http://autos.yahoo.com/blogs/motoramic/jeep-cherokees-missing-action-thousands-stack-factory-192527121.html

[buylowersellhigh]

Any news this morning accounting for the 4% move downward?

[phil_Buffett]

i think its because of this

http://www.4-traders.com/FIAT-SPA-69342/news/Fiat-SpA--Fiat-fails-to-get-quick-trial-in-Chrysler-stake-dispute-17362335/

 

 

September 2014...

[Phaceliacapital]

http://www.autonews.com/article/20131016/OEM01/131019914/fiat-union-plans-to-push-uaw-to-help-end-chrysler-deadlock#axzz2hzIquyn4

[fareastwarriors]

http://www.bloomberg.com/news/2013-10-16/marchionne-pins-alfa-romeo-revival-on-chrysler-s-cash.html

 

Marchionne Pins Alfa Romeo Revival on Chrysler’s Cash

[brker_guy]

The review on the Maserati Ghibli from CR is also a nice reception to the product:

 

http://autos.yahoo.com/news/2014-maserati-ghibli-q4-first-drive-173000941.html

 

 

[fareastwarriors]

http://www.nytimes.com/reuters/2013/10/23/business/23reuters-fiat-brazil-exclusive.html?src=busln

 

Fiat Likely to Miss Brazil Sales Targets-Sources