Fiat will have almost a year to negotiate a price for the 41.5% of Chrysler that is owned by the UAW employee health benefits trust. That’s because the Delaware Court of Chancery set a date in September of 2014 for the lawsuit Fiat has filed against the trust, known as VEBA, to determine the sale price.
Judge Donald Parsons split the difference between the UAW’s preferred date of January 2015 and the May trial that Fiat requested. Fiat even offered to fly executives from Italy for depositions to speed the process. After the scheduled five day trial closes, the judge will likely issue his ruling within 90 days.
The UAW’s trust became Chrysler’s second largest shareholder in exchange for foregoing future health care payments. The VEBA now wants to cash out to fund the health benefits. Fiat CEO Sergio Marchionne is also interested in cash, the cash Chrysler is generating. Fiat’s sales are concentrated in Europe, where the car market continues to be weak and Marchionne needs access to Chrysler’s cash. Some analysts say that without Chrysler’s money, Fiat has no future.
The trial will have jurisdiction over the first of five call options that would allow Fiat to acquire 16.6 percent of Chrysler over time. In total, the difference between the two sides could amount to more than $1 billion. Earlier, Fiat valued a 54,000 share tranche of stock at $139.7 million while the trust put the value of those shares at $343.1 million.
It is assumed that if Fiat and the VEBA do not arrive at an agreed upon price by the start of trial, Judge Parsons ruling will likely establish a price for the remaining 25% of Chrysler stock whose value will not be adjudicated in the trial.