Fiat boss to announce executive restructure

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Published on Friday, 22 July 2011 11:52

Written by Will Peters

Strong U.S. sales for Chrysler and growth in Brazil will help offset a weak European car market for Fiat SpA (FIA.MI), which is tightening its grip on the U.S. automaker.

Fiat will report second-quarter results on Tuesday, incorporating Chrysler for the first time after raising its stake in the company past the 50 percent mark last month.

Fiat had taken an initial 20 percent of Chrysler two years ago under a bailout deal with the U.S. government.

Fiat CEO Sergio Marchionne, who also runs Chrysler, is expected to announce a unified management structure of 25 top executives for both companies, paving the way for a merger while making a Chrysler initial public offering less likely.

"In his mind, Marchionne already thinks of the two companies as a single entity," said a source close to the situation.

Marchionne, who has made Fiat one of Europe's top turnaround stories, wants to elevate the Italian carmaker to a global player through a revamped Chrysler. A merger would reduce costs and improve integration, helping to achieve a target of around 100 billion euros ($143.8 billion) in combined revenue by 2014.

"With the business strategies of Fiat and Chrysler irrevocably linked, we believe a merger is a logical next step," said Goldman Sachs in a research note this week, reinstating Fiat as a "conviction buy" with a price target of 12.9 euros.

Second-quarter results consolidating Chrysler from May 24 are expected to show a trading profit of 485 million euros, according to an survey of analyst expectations distributed by Fiat.