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Fiat Strikes $4.35 Billion Deal to Gain Full Control of Chrysler

Motor Trend logo Motor Trend 1/2/2014 Erick Ayapana
Fiat Strikes $4.35 Billion Deal to Gain Full Control of Chrysler

Fiat has full control of Chrysler following an agreement to purchase the remaining 41.5-percent stake from VEBA, the retiree healthcare trust affiliated with the United Auto Workers (UAW). Fiat-Chrysler boss Sergio Marchionne spearheaded negotiations for the deal that carries a $4.35 billion price tag.

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chrysler-ceo-sergio-marchionne-3-2© Provided by MotorTrend chrysler-ceo-sergio-marchionne-3-2 The transaction, which is expected to close January 20, will have Fiat paying the VEBA trust $1.75 billion. Meanwhile, Chrysler’s contribution will include $1.9 billion up front, plus an additional $700 million that the company will pay in four annual installments. That said, the company has decided to cancel its plans of an initial public offering of Chrysler stock, according to Bloomberg. Chrysler originally filed paperwork for an IPO last September, but the launch was delayed due to a conflict between the automaker and the UAW regarding the value of remaining VEBA stake.

The price of Fiat stock increased by as much as 16 percent following news of the agreement. And with Fiat in full control, Marchionne can move forward with his plan to bolster Fiat’s struggling European arm, encourage more collaborative efforts between the Italian and American nameplates, and increase his company’s global market share.

“In the life of every major organization and its people, there are defining moments that go down in the history books,” Marchionne said yesterday in a statement. “For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments.”

Source: Bloomberg, Reuters

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