Follow Us:
Sunday, December 15, 2019

Fiat strikes $4.35 bn deal for full control of Chrysler

Fiat has already lost many of its market positions in Europe and it won’t be easy to recover that.

Written by Reuters | Detroit | Published: January 3, 2014 1:49:49 am

Italian carmaker Fiat Spa struck a $4.35 billion deal to gain full control of Chrysler Group,ending more than a year of tense talks that have obstructed chief executive Sergio Marchionne’s efforts to combine the two automakers’ resources.

The agreement cements Marchionne’s reputation as the industry’s consummate dealmaker about a decade after he took the helm of Fiat as a car business newcomer,analysts and bankers said. But it remains to be seen whether a merger will be enough to cut Fiat’s losses in Europe. Marchionne’s plan to shore up Fiat depends on the ability to share technology,cash and dealer networks with Chrysler,the No. 3 US automaker.

“This is an increasingly American company now,because in Europe,and especially in Italy,the business conditions remain difficult,” said Andrea Giuricin,transport analyst at Milan’s Bicocca University. “Fiat has already lost many of its market positions in Europe and it won’t be easy to recover that.”

Fiat will acquire the 41.46 per cent stake in Chrysler it did not already own from a retiree healthcare trust affiliated with the United Auto Workers union. The trust,known as a voluntary employee beneficiary association or VEBA,will receive $3.65 billion in cash for the stake,$1.9 billion of which will come from Chrysler and $1.75 billion from Fiat. After the deal closes,Chrysler has committed to giving the UAW trust another $700 million over three years.

The deal is expected to close on or before January 20. Fiat said that because of how the deal is structured it will not need to make any capital increase through a rights issue.

For all the latest News Archive News, download Indian Express App