April 5, 2012 / 3:52 PM / 6 years ago

UPDATE 1-Fiat Industrial in search of alliances

* Marchionne wants to keep Iveco unit in group

* Working on CNH minorities issue, buyout not only option

* Marchionne confirms group 2012 targets

TURIN, APRIL 5 - TURIN, April 5 (Reuters) - Italian engineering group Fiat Industrial is working hard on the alliance front after changes to the group’s capital structure made it easier to contemplate such a move.

“We are continuously at work on alliances. The possibility is for sure - much less in the agricultural machinery sector than in the others,” the group’s chairman Sergio Marchionne said at a press conference after a shareholder meeting.

Fiat Industrial, which broke off from the car-making arm of Fiat at the start 2011, operates in the truck sector with its Iveco brand and in the agricultural and construction machinery business with its US listed CNH unit.

The shareholder meeting on Thursday approved the conversion of Fiat Industrial’s preference and savings shares into ordinary shares, a move that makes it easier to finesse alliances.

Marchionne said he wanted to keep the group’s Iveco truck division inside the group.

There has been speculation in the past that Fiat Industrial could consider merging Iveco with other truck companies or even selling it.

The group’s heavy truck segment has been hit by aggressive competition. Marchionne said he expects demand in the sector in Western Europe and in Latin America to fall in 2012.

China remains a key market for Iveco. Fiat Industrial intends to use it as a springboard for exports to Latin America, Africa, the Middle East and Asia.

“I think a hard landing is very improbable,” Marchionne said, answering a question on economic slowdown in China. Last year the group’s Chinese market shrank 7 percent.

Marchionne, who is also Chief Executive at carmaker Fiat and its U.S. subsidiary Chrysler, confirmed the 2012 targets for Fiat Industrial, including a 25-35 percent dividend payout policy with a minimum dividend pot of 150 million euros.

Asked about buying out minorities in CNH, where Fiat Industrial has almost 90 percent, Marchionne said he would be assessing the situation in the next few weeks.

“Buying out the minorities is not the only solution, we need to chose the best thing,” he said. “Technically we don’t need two listed companies,” he said.

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