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 The company announced on January 1 that it had struck a $4.35
billion deal — cheaper than analysts had expected — to gain full
control of Chrysler, ending more than a year of tense talks that had
obstructed Chief Executive Sergio Marchionne's efforts to create the
world's seventh-largest auto maker.
Fiat said on Tuesday that it had completed the acquisition of the
remaining 41.46 percent stake in Chrysler from a retiree healthcare
trust affiliated with the United Auto Workers (UAW) union. The
trust, known as a voluntary employee beneficiary association, or
VEBA, received $3.65 billion in cash for the stake, $1.9 billion of
which came from Chrysler and $1.75 billion from Fiat.
Chrysler has also committed to giving the UAW trust another $700
million in four equal annual installments, the first of which was
paid in connection with the deal closure, Fiat said.
The Chrysler buyout talks have been closely watched by debt and
equity investors because Fiat's long-term plan to cut losses in
Europe depends on its ability to deepen ties with Chrysler.
The U.S. business is now a profit center for Fiat, but the two
companies are still forced to manage their finances separately. A
full merger will make it easier — but not automatic — to combine the
cash pools of the two companies, giving Fiat more funds to expand
its product line-up.
Fiat will discuss the merged company's future headquarters and a
potential listing outside Italy at a board meeting scheduled for
January 29.
The company is widely expected to move its headquarters outside
Italy, where Fiat was founded 115 years ago — a sensitive topic
among local unions and politicians eager to protect jobs in Fiat's
home market.
Marchionne said at the Detroit car show last week that a listing of
the combined entity was on the agenda for this year. While New York
is the most liquid market, Hong Kong is also an option, the CEO
said, pledging to stay at the helm of the merged group for at least
three years.
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The first big test for the merged Fiat-Chrysler will be a three-year
industrial plan Marchionne is expected to unveil in May, in which he
will outline planned investments and models.
While analysts have widely welcomed the Chrysler deal, which
Marchionne funded without needing a rights issue, they have been
more skeptical about the group's rising debt and 61-year-old
Marchionne's ability to cut losses in Europe.
Fiat has said its new strategy will focus on revamping its Alfa
Romeo brand and keeping production of the sporty marque in Italy as
it seeks to utilize plants operating below capacity, protect jobs
and compete in the higher-margin premium segment of the market.
Shares in Fiat were up 1.77 percent at 7.46 euros by 1630 GMT,
outperforming a 0.11 percent rise for Milan's blue-chip index.
(Reporting by Agnieszka Flak; editing by
David Goodman)
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