Trial to Set Price Fiat Will Pay VEBA for Chrysler Shares Scheduled for Sept. 2014

by TTAC Staff

Updated: February 18th, 2014 Published: October 16th, 2013

trial to set price fiat will pay veba for chrysler shares scheduled for sept 2014

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.

#Chrysler #Fiat #UAWVEBA #VEBA

TTAC Staff

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Aleister Crowley on Oct 16, 2013

Is Sergio holding back on the Cherokees to lower the price Fiat will have to pay for Chrysler? I wouldn't put it past him.

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Lou_BC on Oct 16, 2013

One could argue that once this deal goes through, Chrysler and Fiat will both die. Marchionne would like to move head office out of Italy to a more friendly jurisdiction like the Netherlands.

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- 28-Cars-Later on Oct 16, 2013
  
  Please elaborate I like a good theory.
  
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- Pch101 on Oct 16, 2013
  
  The Netherlands have favorable tax rules. Numerous companies maintain Dutch offices in order to tax advantage of those rules. The notion that Fiat would move to the Netherlands for the purpose of dismantling itself is completely absurd.
  
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- Lorenzo on Oct 16, 2013
  
  No, he's only going to incorporate the combined company in the Netherlands for tax purposes, just as Walter Chrysler incorporated in Delaware. The head office can be anywhere, but likely will be Auburn Hills, with a minor office and maybe design studios in Italy for the Fiat, Ferrari and Maserati brands, to mollify the politicians there and keep the "Italian" heritage of those brands. Fiat globally is following the "sold here, built here" philosophy, and Euro models are more cheaply built in Eastern Europe, so reducing the Italian footprint is the reason for the merger - to separate Fiat from Italy. Europe is a dying market, like downtowns were for department stores, and moving to the "suburbs" is what he's trying to pull off. Never forget that Fiat is part of the Agnelli family empire, and they've been breaking it up while keeping control of the pieces, while also putting distance between their interests and the Italian economic/political mess, since the family members are spread out far beyond Italy. They apparently want their financial interests to go international too, and Chrysler represents a way to put some of their investments into a more stable market than Italy. If that's not what's happening, it would make a great novel/movie. Working title: "Escape From Euroland".
  
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- Morea on Oct 16, 2013
  
  @Lorenzo "the Fiat, Ferrari and Maserati brands" And Alfa Romeo, never forget Alfa Romeo.
  
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- Th009 on Oct 16, 2013
  
  @Morea The way things are going in Italy, Maserati sales will soon exceed those of Alfa Romeo.
  
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- Big Al from Oz on Oct 16, 2013
  
  @Lorenzo Sergio wants out of Italy because of the ridiculous workplace relations that is impeding a more satisfactory improvement of the Italian situation. Italy is a mess, politcally, economically and with workplace reform. It's a nightmare to operate any large industrial business. They should let it become 3rd world and controlled by the Mafia. Essentially Italy is controlled by poor governance. Sergio has influenced more flexible workplace arrangements, but they aren't enough. Italy and many of the Mediterranean countries tried to emulate the lifestyle and standard of living of their northern neighbours, but can't achieve them. Sergio wants to have complete control of Fiat. If and when Fiat and Chrysler unite into one business they will move to the Netherlands. Ram/Jeep/Dodge/Chrysler will become European. As I've stated Fiat and Chrysler are already controlled by the same people, who naturally are leaning towards Fiat control. Fiat/Chrysler will become the 7th or 8th largest auto manufacturer globally. But, like Pch101 stated this still isn't large enough since you will see many larger takeovers within the auto industry until you end up with a few extremely large manufacturers. This debacle of the VEBA buyout isn't just for the workers health. It's more of a political game by the powerbrokers, ie, UAW, Fiat, etc.
  
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Big Al from Oz on Oct 16, 2013

Fiat and Chrysler are controlled by the same people at the BoD level. Financial operations etc for Fiat are the same people at Chrysler. Don't quote me on this but I think their are 12 people? Also, the VEBA BoD was selected by, you guessed it the UAW and the court in January 2010. Chrysler and Fiat had nothing to do with the VEBA board selection, the UAW had the most influence. The UAW don't want Sergio's influence to increase in the US. The UAW can use the argument they are in it for the Chrysler UAW employees. But as you can see historically the UAW tends to defend the institution of the UAW over the needs of the rank and file. Sergio wants to control and form one larger company. Sergio will achieve his goals. The UAW are trying to influence a price that is way to high. Its a joke. Remeber the agent dealing with the VEBA sale is just that an agent and he will provide advice, but will end up doing what is asked of him by the UAW controlled VEBA BoD.

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MLS on Oct 17, 2013

For the love of god, would you please use the proper logo (i.e., the Pentastar) when referencing Chrysler Group instead of an outdated logo for the Chrysler brand?

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