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Investor wants FCA to sell European operations, change name to JeepRAM

Investor wants FCA to sell European operations, change name to JeepRAM

The proposal is intended to lift FCA's valuation.

One of Fiat Chrysler's smaller investors is urging the company to sell off its European operations, including the company's Alfa Romeo and Maserati brands, to improve the company's financial outlook.

The suggestion was made by ADW Capital Management, a stakeholder in FCA since 2014, in a letter sent to the automaker's board. ADW said in the letter that the changes would help "eliminate [FCA's] turnaround valuation.”

"While Fiat has premium brands which are secularly growing, the strongest balance sheet and highest growth profile of all U.S. carmakers, the company trades at a significant discount to its closest peers, GM and Ford,” ADW Founder Adam Wyden, 34, wrote in the letter obtained by Bloomberg News.

FCA's margins in North America are better than Ford's and on par with General Motors', but the company's share price lags both of its Detroit rivals.

In his letter, Wyden outlined a plan to change the company's name to JeepRAM, reflecting the company's strongest performing brands. FCA currently generates 97 percent of its profits from the North American market, largely on the back of Jeep and RAM sales. Wyden would also like FCA to adopt U.S. GAAP accounting standards to enable more investing.

In order to better focus on its higher-earning North American operations, ADW wants FCA to sell off its Fiat brand. ADW suggested that Fiat might find a home with France's PSA Group, which recently purchased GM's European operations. The proposal also calls for Alfa Romeo and Maserati to be combined into one business and then sold off.

Interestingly, ADW also wants FCA to merge with a North American automaker like GM. Former FCA boss Sergio Marchionne, who died earlier this year, pushed unsuccessfully for a similar type of merger.

It remains to be seen how much influence, if any, ADW's letter will have on FCA's board. The fund isn't listed as one of FCA's top 100 investors, and the Agnelli family, which holds more than 50 percent of the company's voting rights, doesn't have a track record of being receptive to investor suggestions.