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Wed January 1, 2014
Fiat to own 100% of Chrysler by January 20
Fiat began the new year with a pretty big announcement: It will soon have full ownership of Chrysler.
The Italian automaker owns 59% of Chrysler, and will buy the 41% stake owned by the VEBA -- a trust set up to pay for union retiree health care -- by January 20.
The company will pay $3.65 billion. The company will also pay the VEBA an additional $700 million, split into four equal payments, made over the next four years.
Kristin Dziczek is with the Center for Automotive Research. She says it seems like a fair deal, and the VEBA avoids the uncertainty of an initial public offering on the stock exchange.
"This is a lot less messy -- and the VEBA cannot buy health care with equity," says Dziczek.
For his part, Chrysler and Fiat CEO Sergio Marchionne has long said he would prefer to own Chrysler outright, rather than having an initial public offering.
Months of haggling resulted in a price a little lower than the VEBA's estimate of how much its stock was worth. The two sides have been in court over the issue. That litigation will be dropped as part of the deal.
Dziczek figures American consumers probably won't notice the change. After all, Chrysler's successful "Imported From Detroit" ad campaign started when the company was already majority-owned by an Italian automaker.
"Chrysler is an American brand," says Dziczek. "It's a company that employs a whole lot of people here in the United States and their vehicles are made here."
A Chrysler spokesman says the new company will maintain its current headquarters arrangement -- one in Auburn Hills, one in Turin, Italy, one in China, and one in Brazil.
But the company may choose a new symbol for the New York Stock Exchange.