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Merging the companies would give Fiat access to Chrysler's cash. Currently, Fiat shares in Chrysler's profits but can't use the Detroit automaker's funds for its own operations. Fiat lost $108 million in the first quarter, while Chrysler made $166 million. Without Chrysler, Fiat would have lost $1.41 billion last year. Chrysler had $11.9 billion in cash as of March 31. Like Fiat, the trust got its stake in Chrysler from the government as part of the 2009 bankruptcy. At the time Chrysler owed the trust around $4 billion as part of a deal with the UAW to take over retiree health care costs. The trust fund needs cash to pay medical bills for thousands of Chrysler blue-collar retirees. In order to monetize its stake in Chrysler, it either has to sell the shares to another party, such as Fiat, or sell to the public
-- which could happen if Fiat and the trust can't agree on a share price. The trust has asked Fiat to begin working on an IPO of Chrysler, but cannot formally compel it to follow through; a public offering takes about 18 months to prepare. Marchionne has said he favors buying the trust's stake to a public sale. Marchionne has already taken steps to combine Fiat and Chrysler. The companies are sharing engines and parts and have jointly designed cars like the Dodge Dart compact. The balance sheets are already combined, although there is a strict separation of assets.
[Associated
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