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A plan by Fiat S.p.A. to convert preference and savings shares into ordinary shares will reduce the cost of equity and remove a potential hurdle to a merger with Chrysler, which is now majority owned by the Italian carmaker.

Fiat and its sister company Fiat Industrial said late on Thursday the proposed conversion would streamline the capital structure and simplify governance for both groups.

Analysts said the plan was moderately earnings-enhancing as it would reduce the total number of issued shares and eliminate the cost of higher dividends for holders of savings and preference shares.

Simplifying the equity structure would also allow Fiat to remove a possible barrier to a full merger with Chrysler, which it has managed since a bailout deal with the U.S. government in 2009, they added.

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