Italian car manufacturer Fiat announced on Wednesday that it has reached an agreement to acquire the remaining shares of Chrysler for $3.65bn (£2.2bn) in payments to a union-controlled trust fund.
Fiat already owns 58.5% of Chrysler's shares, with the remaining 41.5% held by a United Auto Workers (UAW) union trust fund that pays health care bills for retirees.
Under the deal, Fiat will make an initial payment of $1.9bn to the fund, plus an additional $1.75bn upon closing the deal. Chrysler will also make additional payments totalling $700m to the fund as part of an agreement with the UAW.
The deal is expected to close on or before 20 January, according to a statement from Chrysler.
Sergio Marchionne, CEO of both Fiat and Chrysler, has long sought to acquire the union's shares in order to combine the two companies.
"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 knowhow, a solid and open organisation," Marchionne said in a statement.
The deal eliminates the need for an initial public offering of the union fund's stake, which analysts had previously valued at $5.6bn. Fiat went to court last year seeking a judgment on the price, but the trial date was set for this September.
Marchionne cannot spend Chrysler's cash on Fiat's operations unless the companies merge. In recent months he made it clear that he preferred to settle the dispute without an IPO, but filed the paperwork for the offering in September at the trust's request.
Chrysler's profits have helped prop up Fiat on the balance sheet as the Italian firm struggles in the depressed European market. The Michigan-based car company earned $464 million in the third quarter on US sales of the Ram pickup and Jeep Grand Cherokee, its ninth straight profitable quarter.
The results boosted Fiat, which earned $260m in the quarter. Without Chrysler's contribution, Fiat would have lost $340m.
theguardian.com
Fiat already owns 58.5% of Chrysler's shares, with the remaining 41.5% held by a United Auto Workers (UAW) union trust fund that pays health care bills for retirees.
Under the deal, Fiat will make an initial payment of $1.9bn to the fund, plus an additional $1.75bn upon closing the deal. Chrysler will also make additional payments totalling $700m to the fund as part of an agreement with the UAW.
The deal is expected to close on or before 20 January, according to a statement from Chrysler.
Sergio Marchionne, CEO of both Fiat and Chrysler, has long sought to acquire the union's shares in order to combine the two companies.
"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 knowhow, a solid and open organisation," Marchionne said in a statement.
The deal eliminates the need for an initial public offering of the union fund's stake, which analysts had previously valued at $5.6bn. Fiat went to court last year seeking a judgment on the price, but the trial date was set for this September.
Marchionne cannot spend Chrysler's cash on Fiat's operations unless the companies merge. In recent months he made it clear that he preferred to settle the dispute without an IPO, but filed the paperwork for the offering in September at the trust's request.
Chrysler's profits have helped prop up Fiat on the balance sheet as the Italian firm struggles in the depressed European market. The Michigan-based car company earned $464 million in the third quarter on US sales of the Ram pickup and Jeep Grand Cherokee, its ninth straight profitable quarter.
The results boosted Fiat, which earned $260m in the quarter. Without Chrysler's contribution, Fiat would have lost $340m.
theguardian.com
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