Chrysler 2015 Annual Report Download - page 32

32 2015 | ANNUAL REPORT
Overview
On January 21, 2014, Fiat purchased all of the VEBA Trust’s equity interests in FCA US, which represented the
41.5 percent of FCA US interest not then held by us, resulting in FCA US becoming an indirect 100 percent owned
subsidiary of FCA.
The FCA Merger
On January 29, 2014, the Board of Directors of Fiat approved a proposed corporate reorganization resulting in the
formation of FCA and decided to establish FCA, organized in the Netherlands, as the parent company of the Group
with its principal executive offices in the United Kingdom.
On June 15, 2014, the Board of Directors of Fiat approved the terms of a cross-border legal merger of Fiat, the
parent of the Group, into its 100 percent owned direct subsidiary, FCA, (the “Merger”). Fiat shareholders received
in the Merger one (1) FCA common share for each Fiat ordinary share that they held. Moreover, under the Articles
of Association of FCA, FCA shareholders received, if they so elected and were otherwise eligible to participate in
the loyalty voting structure, one (1) FCA special voting share for each FCA common share received in the Merger.
The loyalty voting structure is designed to provide eligible long-term FCA shareholders with two votes for each FCA
common share held.
FCA was incorporated under the name Fiat Investments N.V. with issued share capital of €200,000, fully paid and divided
into 20,000,000 common shares having a nominal value of €0.01 each. Capital increased to €350,000 on May 13, 2014.
Fiat shareholders voted and approved the Merger at their extraordinary general meeting held on August 1, 2014.
After this approval, Fiat shareholders not voting in favor of the Merger were entitled to exercise cash exit rights (the
“Cash Exit Rights”). The redemption price payable to these shareholders was €7.727 per share (the “Exit Price”),
equivalent to the average daily closing price published by Borsa Italiana for the six months prior to the date of the
notice calling the meeting.
As a result of the exercise of the Cash Exit Rights, concurrent with the Merger, a total of 53,916,397 Fiat shares were
canceled in the Merger with a resulting net aggregate cash disbursement of €417 million.
The Merger became effective on October 12, 2014 and, on October 13, 2014, FCA common shares commenced
trading on the NYSE and on the MTA. The Merger is recognized in FCA’s consolidated financial statements from
January 1, 2014. As a result, FCA, as successor of Fiat, is the parent company of the Group. There were no
accounting effects as a direct result of the Merger.
Ferrari Spin-off
On October 26, 2015, Ferrari N.V., a subsidiary of FCA, completed its initial public offering (“IPO”) in which FCA sold
10 percent of Ferrari N.V. common shares (“Ferrari IPO”) and received net proceeds of approximately €0.9 billion,
resulting in FCA owning 80 percent of Ferrari N.V. common shares, Piero Ferrari owning 10 percent of common
shares and public shareholders owning the remaining 10 percent of Ferrari N.V. common shares. The Ferrari IPO was
accounted for as an equity transaction.
In October 2015, in connection with the Ferrari IPO and in preparation for the spin-off of the remaining shares of Ferrari
N.V. owned by FCA, FCA carried out an internal corporate restructuring. As part of this reorganization, FCA transferred
its shares of Ferrari S.p.A. to Ferrari N.V. and provided a capital contribution to Ferrari N.V., while Ferrari N.V. issued
a note payable to FCA in the amount of €2.8 billion. This internal restructuring was a common control transaction
and did not have an accounting impact on FCA’s Consolidated Financial Statements. However, as a result and in
connection with the transactions in which Piero Ferrari exchanged his shares in Ferrari S.p.A. for Ferrari N.V. shares,
FCA paid €280 million to Piero Ferrari as consideration for the dilution of his share value due to the issuance of the
€2.8 billion note payable, which was recorded as a reduction to non-controlling interests.
The transactions necessary to separate FCA’s remaining ownership interest in Ferrari N.V. and to distribute that
ownership interest to holders of FCA shares and mandatory convertible securities were approved at a meeting of
FCA shareholder on December 3, 2015. The transactions to separate Ferrari N.V. from the Group were completed on
January 3, 2016.