Jan 1 2014, 2:22pm CST | by Forbes
After months of wrangling, Fiat SpA and a United Auto Workers trust fund agreed to a $4.35 billion deal for the Italian car maker to buy the remaining stake in Chrysler Group LLC, setting up a merger to create the world’s seventh-largest automaker.
Fiat and the UAW retiree health-care trust have shared ownership of Auburn Hills, Mich.-based Chrysler since its 2009 bankruptcy. Fiat, which already holds 58.5 percent of Chrysler, has long wanted to acquire the remaining stake, but the two sides have been fighting over what is a fair price.
Under the settlement, Turin, Italy,-based Fiat will pay the trust $1.75 billion in cash, and Chrysler will contribute $1.9 billion through a special dividend to complete the transaction for the remaining 41.5 percent stake. The deal is expected to close by Jan. 20. In addition to the price for the stake, Chrysler agreed to pay the trust $700 million in four annual installments, with the first to be made when the deal closes.
“In the life of every major organization and its people, there are defining moments that go down in the history books,” Sergio Marchionne, chief executive of both carmakers, said in the statement. “For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments.”
“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” said John Elkann, Chairman of Fiat. “The work, commitment and achievement I have witnessed from Chrysler over the past four and a half years is nothing short of exceptional,” he added.
Marchionne’s vision since taking control of Fiat in 2004 has been to create a global automaker with the scale to challenge industry leaders General Motors, Volkswagen AG and Toyota Motor. The full combination of Fiat and Chrysler would create the world’s seventh largest automakers.
As part of the deal, Fiat and the UAW trust agreed to abandon their ongoing court fight over the value of a portion of the trust’s stake. Nor is a planned public stock offering by Chrysler expected to proceed.
Source: Forbes Auto
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