Fiat has confirmed it has completed the takover of the 'Chrysler Group' by aquiring the remaining 41.46 per cent stake in Chrysler LLC that it didn't previously own.
The take over plans were initially announced on January 1 and it has now been confirmed the Chrysler Group is now a wholly-owned subsidiary of Fiat. The remaining stake in the company was previously owned by the VEBA Trust – a retiree healthcare trust affiliated with the United Auto Workers union.
The deal will see Chrysler Group pay $1.9 billion and Fiat pay $1.75 billion to buy out the VEBA Trust. The total of $3.65 billion (around £2.2 billion) has been paid, with Chrysler adding a further $700 million (around £424 million) in four, equal annual instalments, with the first to be made as soon as Fiat pays up.
The deal ends the lengthy and tense negotiations between Fiat CEO Sergio Marchionne and the stakeholders. The VEBA Trust had threatened to sell its shares on the open market after Fiat and VEBA valued the 41.16 per cent stake very differently. However, now that the deal is done, Marchionne's bid to merge Fiat and Chrysler and create the world’s seventh biggest carmaker will progress.
As part of the deal, the UAW union has agreed to support the Fiat-Chrysler alliance as the companies merge, including agreeing to Marchionne’s restructuring plan to make the group much more competitive and cost-effective.
The merger will allow the two companies to share resources and cash much more closely across all brands – Abarth, Alfa Romeo, Fiat, Lancia and Maserati with Chrysler, Dodge and Jeep.
Due to the difficulties in the European car market, Fiat has had to rely heavily on Chrysler’s better position in the US in order to still post a profit.
Marchionne has been the CEO of both Fiat and the Chrysler Group since 2009. He said, “In the life of every major organisation and its people, there are defining moments that go down in the history books. For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments.
I will be forever grateful to the leadership team for the support and unwavering dedication shown to the integration project that today has taken its final shape. The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organisation that will ensure all employees a challenging and rewarding environment.”