* Shareholder meeting kicks off at 0900 GMT
* Two-thirds majority needed for merger to be approved
* Merger key to facilitate U.S. listing, capital raising
By Agnieszka Flak
TURIN, Italy, Aug 1 Fiat shareholders
are expected to approve the Italian carmaker's merger with its
U.S. unit Chrysler on Friday, a union aimed at boosting the
world's seventh-largest auto group's appeal with foreign
investors and paving the way for a U.S. share listing.
Chief Executive Sergio Marchionne completed the buyout of
Chrysler earlier this year and is hoping to incorporate the two
as a Dutch-registered combine, Fiat Chrysler Automobiles (FCA).
He counts on the merger and the U.S. listing to help foot
the bill for his ambitious 48 billion euro ($64 billion) plan to
grow net profit five-fold and sales by 60 percent by 2018.
Marchionne helped rescue Chrysler in 2009 and turned the
U.S. firm into a key profit centre for Fiat, although quarterly
results released on Wednesday disappointed.
The full merger will help Marchionne distance himself from
troubles in Europe, where thousands of Fiat's Italian workers
are still on state-backed temporary lay-off schemes, highlight
its gains in the United States and convince a larger pool of
investors that the merged Fiat Chrysler can take the fight to
rivals General Motors and Ford Motor Co.
"The birth of FCA will end the precarious life of Fiat,"
Chairman John Elkann, the grandson of late Fiat patriarch Gianni
Agnelli, has said. "For the first time we have a different
perspective: we don't need to play a game of survival."
FCA is expected to be headquartered in London and have its
tax domicile in Britain, Fiat has said, cementing a
politically-sensitive shift away from Italy, its home of the
past 115 years.
The merger will not result in any significant operational
cost savings or synergies, Fiat has said, and failure to secure
shareholder approval would have little operational impact.
However, a rejection would likely "prove embarrassing for
Marchionne and may result in higher financing costs going
forward," Arndt Ellinghorst, a London-based analyst at
investment researchers ISI Group, said in a note.
A two-thirds majority is needed to approve the deal.
Marchionne said last week he was confident that the merger
would be approved, although proxy advisory firms differed in
their recommendations to international investors.
ISS and smaller peer Frontis Governance recommended that
investors vote against the deal, saying it would reduce
shareholder rights and tighten the grip on the company by the
Agnelli family's holding group Exor.
But another key proxy adviser, Glass Lewis, said the
merger's benefits outweighed the risks.
"The proposed reincorporation is, on balance, in the best
interests of shareholders," Glass Lewis said.
Exor owns 30 percent of Fiat, but its voting power could
rise to as much as 46 percent via a loyalty scheme put in place
as part of the merger to reward long-term investors.
Investors will receive one FCA share for each Fiat share
they hold. Most will also be eligible for the special voting
shares, which will not be listed or traded.
Shareholders who vote against the merger are entitled to
cash exit rights of 7.727 euros per share. Should the total sum
that needs to be paid for those exit rights exceed 500 million
euros, the merger will not go ahead, Fiat has said.
($1 = 0.7468 Euros)
(Reporting by Agnieszka Flak; Editing by Elaine Hardcastle)