(adds details, background)
By Stefano Rebaudo
MILAN Aug 7 Norway's sovereign wealth fund was
the single largest shareholder to vote against Italian carmaker
Fiat's merger with its U.S. unit Chrysler, according to
minutes of the Aug. 1 shareholder meeting.
Norges Bank, which registered for the shareholder meeting
with a 2.15 percent stake, declined to say on Thursday why it
voted against the tie-up or whether it would exercise its right
as a dissenting investor to sell its shares in Fiat.
The merger was approved by a two-third majority of
shareholders at last week's meeting, with about 8 percent voting
But it could still fall apart if enough dissenting investors
sell their shares for a cash compensation - a right granted to
them under Italian law given the carmaker's decision to move its
headquarters and fiscal domicile away from its Italian homebase.
Chief Executive Sergio Marchionne wants to merge Fiat and
Chrysler into the world's No.7 auto group before a New York
listing, a move that should help it fund an ambitious investment
However, Fiat has said that if it has to pay more than 500
million euros ($668 million) to dissenting shareholders -
equivalent to just over 5 percent of Fiat shares at the cash
exit price - the merger would not go ahead.
People's Bank of China also voted against the merger with a
portion of its 2 percent stake.
Among those that voted in favour was Vanguard International
Growth Fund, another key investor with 2.4 percent of Fiat.
Two shareholder advisers, ISS and Frontis Governance,
recommended a vote against the merger saying a loyalty scheme
put in place as part of the deal would give too much power to
holding group Exor, owned by the Agnelli family.
The family controls Fiat Chrysler with a 30 percent stake
but its voting power could rise to as much as 46 percent.
A filing by Italian stock market watchdog Consob showed this
week that Norges Bank had cut its stake in Fiat to 1.338 percent
on July 31, a day before the shareholder meeting.
Under the terms of the merger deal, dissenting investors can
sell their shares for a cash exit price of 7.727 euros, well
above Fiat's current stock price of 6.75 euros a share.
The shares have suffered a marked drop this week amid
concern the merger could be derailed.
Shareholders have until Aug. 20 to decide whether to
exercise their exit right.
(1 US dollar = 0.7481 euro)
(Reporting by Stefano Rebaudo, writing by Silvia Aloisi;
Editing by Lisa Jucca and Mark Potter)