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

The New Role Of Leaders
When Alfred Sloan created the modern corporation at General Motors, he based it on the military.  The company was split into divisions, each with its own leadership.  Information flowed up, orders went down and your...
 
 
2014 Lexus GX 460 Test Drive And Review: The Refined Off-Roader
2014 Lexus GX 460 My absolute favorite vehicle segment is the mid-sized SUV. I like mine with a robust body structure (usually body-on-frame), good ground clearance and straightforward technology for all terrains....
 
 
Asia's Week: Japan's Rebound Gets More Taxing
Another calamitous loss of human life gripped Asia’s attention this week, relegating economic matters to secondary notice, but they were also of concern. China’s growth pauses never cease to furrow brows but it is Japan...
 
 
China's Round Two on Electric Cars: Will It Work?
Everyone loves China’s five-year plans. They tell you everything you need to know about the future direction of the Chinese economy: intentions and priorities, along with timetables and targets. The only thing missing...
 
 
 

Latest from the Network

Miley Cyrus postponed Bangers tour until August
Miley Cyrus has postponed her 'Bangerz' tour until August. The 'Wrecking Ball' hitmaker has been forced to reschedule the remaining US dates of her tour after suffering from a severe allergic reaction to antibiotics...
Read more on Celebrity Balla
 
Hearthstone vs. Rollercoaster Tycoon 4: The Battle For The Soul Of Mobile Games
It’s been an interesting month for mobile games, one that I believe clearly illustrates a split for the scene with the release of two high profile games, Blizzard’s Hearthstone and Atari’s RollerCoaster Tycoon 4....
Read more on Apple Balla
 
Emails Reveal What Samsung Planned After Steve Jobs’ Death
Back in October of 2011, Tim Cook announced that they were going to release the iPhone 4s as well as the iPhone 5, with preorders starting the next week. Samsung had a meeting over what they could do about this, in an...
Read more on Apple Balla
 
Yahoo Wants Apple To Switch For iOS Searches
Apple devices have used Google search engine results for a long time now, but that might be changing if other forces have their way. Re/code is now reporting that the CEO of Yahoo, Marissa Mayer, would like to convince...
Read more on Apple Balla
 
Experts Encouraging Investments In Apple Stock
According to an Analyst at Morgan Stanley, Apple’s stock isn’t seen as a risk at the moment and if anyone is still trying to make up their mind about buying in, this is the time.During research and development phases at...
Read more on Apple Balla
 
How The Corinthia Hotel Lisbon Became Extraordinairly Energy Efficient
In an interview with Pedro Ferreira, engineer at Corinthia Hotel Lisbon, we discussed the hotel’s efforts to become more and more energy efficient—and why—resulting in the property being awarded the Western Europe...
Read more on Business Balla
 
Consumers Hunt For Easter Bargains
Easter weekend is time to celebrate a religious holiday, spend time with family and friends and welcome the upcoming spring weather. Consumers look forward to shedding winter coats, planting flowers and riding bikes in...
Read more on Business Balla
 
Social Intrapreneurism: How Business Innovators Are Helping To Build A More Sustainable World
In a joint interview with Professor David Grayson, Melody McLaren, and Heiko Spitzeck, we discussed their new book, Social Intrapreneurism and All That Jazz: How Business Innovators are Helping to Build a More...
Read more on Business Balla
 
How To Repeat Your Initial Success: Coming Up With An Encore
Some 30 years ago, I began work on my first  book: Sweat Equity which profiled America’s best entrepreneurs. Even though the book is long out of print (so this is as far from a plug as possible), I thought it would be...
Read more on Business Balla
 
Onsite Generation: Can Utilities Rethink Their Business Proposition?
Can utilities adapt to emerging innovations that allow customers to “bypass” their services? Or, will power companies become the modern-day dinosaur? The trend is toward more independent customers who are able to...
Read more on Business Balla
 
 
Auto Balla Sexy Balla Sport Balla TV Balla Politics Balla Movie Balla Apple Balla Business Balla Ad Balla Celebrity Balla