Fiat to Complete Chrysler Buyout: A Win-Win Deal?

Jan 1 2014, 5:46pm CST | by

Fiat to Complete Chrysler Buyout: A Win-Win Deal?
Photo Credit: Forbes Auto

Fiat Chairman Sergio Marchionne expects to realize his goal of acquiring 100% of Chrysler Group LLC later this month, setting the stage to fully merge the two automakers.

Under an agreement announced today, Fiat SpA will pay $4.35 billion to a United Auto Workers retiree healthcare trust to buy the 41.5% of Chrysler that the Italian carmaker doesn’t already own. The deal is scheduled to close by Jan. 20.

The pact ends an 18-month legal battle over the value of the trust’s shares. The agreed-on price is considerably higher than the $3 billion that Fiat reportedly wanted to pay. The payoff is also slightly sweeter than the $41.5 billion price implied by an investment bank’s estimate of Chrysler’s total value last fall. The trust reportedly sought

$5 billion for its stake.

The UAW trust gets cash to fill its $3 billion shortfall in benefits funding for Chrysler retirees.

Fiat will be able to fully merge with Chrysler, gaining greater flexibility to combine operations and giving the struggling Italian company full access to Chrysler’s $11.5 billion cash hoard. The bulk of the purchase price—$2.6 billion—comes from Chrysler itself. That’s all good news for Fiat, which has been struggling in Europe’s weak car market.

The buyout ends Fiat’s lawsuit against the union trust, which wasn’t scheduled to go to court until September. The deal also scuttles the initial public offering that the trust was trying to force Chrysler to hold. An IPO would have established the value of Chrysler stock. But it would have blocked Fiat’s attempt to acquire the entire U.S. company.

Marchionne has said that once Fiat and Chrysler are merged, the combined entity may issue new stock—quite possibly on one of the New York stock exchanges, rather than in Italy. He has hinted that the new company might even be based in the U.S.

Source: Forbes Auto

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

IPad Air Giveaway 2014 is Online
IPad Air Giveaway 2014 is Online
Our sister site I4U News is giving away a brand new iPad Air or if you can wait an iPad Air 2. This is an $499 value.
 
 
Your Parent Or Kid Moved In: Are You Covered?
A record 57 million Americans now live in multigenerational family households — double the number in 1980, according to a new Pew Research Center study. And I bet many of them have the wrong homeowner’s or renters...
 
 
Pandora Looks to Challenge Terrestrial Radio's Dominance in Cars
Pandora Media is one of the largest Internet radio providers in the U.S. with more than 75 million active users. While the company’s active user count has increased at a robust pace historically, it is likely to slow...
 
 
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
It’s January 2026. New York Yankees owner Hal Steinbrenner gets out of his driverless car and triumphantly marches before the gathered press to introduce his prized new free agent. It’s a record-breaking contract—over...
 
 
 

Latest from the Network

Real Madrid aim for big-six season
Madrid, Aug 21 (IANS) If pre-season results were anything to look on then Real Madrid coach Carlo Ancelotti would be feeling hot under the collar and looking anxiously over his shoulder following four defeats, one win...
Read more on Sport Balla
 
Israel killed three senior commanders: Hamas military wing
Gaza, Aug 21 (IANS) The al-Qassam Brigades, the military wing of the Islamist Hamas movement, Thursday said that Israel has killed three of its senior commanders in the Gaza Strip. It said the three commanders were...
Read more on Politics Balla
 
Ebola toll rises to 1,350: WHO
Geneva, Aug 21 (IANS/EFE) The death toll due to the Ebola virus continues to rise in West Africa and currently stands at 1,350, the World Health Organisation (WHO) said. Of that number, 576 have died in Liberia where...
Read more on Business Balla
 
India charges Nepal lowest interest rate
Kathmandu, Aug 21 (IANS) Compared to other South Asian countries, India charges Nepal the lowest interest rate for the lines of credit (LOCs) it offers, a diplomat here said. "This shows India's close affinity to...
Read more on Politics Balla
 
An abusive boss can make entire team hostile
New York, Aug 21 (IANS) Is your boss abusive and does not pay much heed to even positive suggestions made by the team? Such superiors can actually throw the entire work team into conflict, hurting productivity, reveals...
Read more on Apple Balla
 
Paltrow okay with Martin's relationship with Lawrence
Los Angeles, Aug 21 (IANS) Actress Gwyneth Paltrow reportedly approves of estranged husband Chris Martin's romance with Jennifer Lawrence. The "Iron Man 3" star, who recently started dating "Glee" co-creator Brad...
Read more on Celebrity Balla
 
Bradley Cooper reveals his love of Oasis
Hollywood superstar Bradley Cooper is a big fan of Oasis. Bradley, 39, has revealed his love of the group - who officially split in 2009 after a string of high-profile disagreements between Noel and Liam Gallagher - was...
Read more on Movie Balla
 
Dan Stevens gets in shape for The Guest
Dan Stevens has got himself in shape to play a former American soldier in 'The Guest'. The 31-year-old actor is almost physically unrecognisable from the character of Matthew Crawley, who he played in the popular...
Read more on Movie Balla
 
Unesco condemns American journalist's killing
Paris, Aug 21 (IANS) Unesco director general Irina Bokova Thursday condemned the beheading of US journalist James Foley by extremist Islamist militants in Iraq, calling it a "heinous killing". "I condemn the murder of...
Read more on Politics Balla
 
OPEC daily basket price closes higher
Vienna, Aug 21 (IANS/WAM) The basket of 12 crude oils of the Organisation of Petroleum Exporting Countries (OPEC) stood at $99.52 a barrel Wednesday, compared to $98.93 Tuesday, according to the OPEC Secretariat. The...
Read more on Business Balla