MILAN Fiat FIA.MI signaled its merger with U.S. affiliate Chrysler was on track on Friday as a tally of shareholders suggested most had chosen not to exercise an option that could derail the plan, a vital step in the Italian carmaker's turnaround efforts.
Chief Executive Sergio Marchionne wants to incorporate the two carmakers into a Dutch-registered company called Fiat Chrysler Automobiles (FCA), paving the way for a U.S. stock market listing that would help fund an ambitious investment plan.
But it could fail if the carmaker were asked to pay more than 500 million euros ($658 million) to investors who decide to sell their shares, exercising a legal right triggered by Fiat's decision to move its registered offices away from Italy.
Fiat said it was finishing a count of shares for which cash exit rights had been validly exercised, but it could already say that the 500 million euro limit would not be exceeded, based on data calculated so far.
"Fiat has determined that even if all remaining unmatched notices and unmatched confirmations were to be matched, the maximum number of shares for which cash exit rights have been validly exercised will yield an aggregate exposure that is below the cap," it said in a statement.
It plans to publish the final count by Sept. 4.
Investors had until Aug. 20 to tell Fiat whether they planned to cash in on their exit rights.
The merger of Fiat and Chrysler, which already operate as a single company, was approved by shareholders at the start of August but dissenting investors had a right to sell their shares for an exit price of 7.727 euros.
"The Fiat statement puts to rest rumors that have been doing the rounds since the start of this month ... and ensures the merger process with Chrysler will turn out well," Italian broker ICBPI said.
At 0850 GMT, Fiat shares were up 1.3 percent, outperforming the Italian benchmark share index .FTMIB
Marchionne said previously that if a critical mass of investors were to breach the cap, he would start the merger process again - effectively meaning a delay of several months.
"I am reassured by the fact that the vast majority of our equity holders have remained loyal and committed shareholders," Marchionne said in the statement on Friday.
Fiat said it did not expect creditor opposition to stand in the way of a timely closure of the merger. Creditors, including bondholders, have until Oct. 4 to submit objections.
(1 US dollar = 0.7594 euro)
(Editing by Tom Pfeiffer)