Fiat strikes deal for full merger with Chrysler
By Dario Thuburn, AFP
January 3, 2014, 12:02 am TWN
ROME -- Italian carmaker Fiat said on Wednesday it had agreed to buy up the remainder of Chrysler in a historic US$3.65 billion (2.66-billion-euro) deal, paving the way for a full merger that will create a new global auto giant.
Fiat said the long-awaited agreement with its U.S. partner included a US$1.75 billion cash payment for the 41-percent stake that has been held by the VEBA fund of the U.S. auto worker's union UAW since Chrysler's bankruptcy procedure.
Fiat chief executive Sergio Marchionne, who is also the CEO of Chrysler, said in a statement from the company's headquarters in Turin in northern Italy that the transaction would “go down in the history books.”
“The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique,” Marchionne was quoted as saying.
Fiat said it expected the deal to be wrapped up by Jan. 20, completing a process that began in 2009 with the start of Fiat's partnership with Chrysler following the storm of the global economic crisis and the plunge in U.S. car sales.
Fiat originally took a 20-percent stake in the third largest U.S. automaker as part of the company's bankruptcy.
What was originally seen as a risky bet for Fiat — the German automaker Daimler had failed to turn around Chrysler — has paid off handsomely as Chrysler's sales are now booming after decades of turbulence and decline.
Chrysler's profits have been keeping Fiat buoyant in recent years amidst a deep downturn in Europe, and Marchionne has been steadily expanding Fiat's stake in Chrysler.
Marchionne's ambitious goal is to create a new global player in the auto industry with the capital and volume to compete with the likes of Toyota and General Motors.
Fiat said its deal with VEBA included a US$1.9 billion special distribution payable by Chrysler Group to its members, as well as an additional contribution of US$700 million from Chrysler in return for specific trade union commitments on supporting the Fiat-Chrysler alliance.
“I have been looking forward to this day from the very moment that we were chosen to assist in the rebuilding of a vibrant Chrysler back in 2009,” John Elkann, Fiat's chairman, said in the statement.