By on January 22, 2014

chryfiat

Fiat announced that it has completed the acquisition of all remaining shares in Chrysler Group that it did not own. The United Auto Workers’ retiree healthcare trust, known as a voluntary employee beneficiary association or VEBA, received $3.65 billion in cash for its 41.46% stake in the Auburn Hills based automaker, $1.9 billion of which came from Chrysler and $1.75 billion from Fiat. The total deal is worth $4.35 billion, with Chrysler committed to pay the trust the remaining $700 million in four annual equal payments, the first of which was made when the deal was consummated.

The closing of the deal took place after a year and a half of negotiations, lawsuits and the threat of an initial public offering of Chrysler stock, but Sergio Marchionne has finally realized his ambition to combine Fiat and Chrysler. That gives Fiat access to Chrysler’s profits, needed to shore up the Italian automaker which is overexposed to the weak European market. Fiat projects spending as much as 9 billion euros ($12 billion) on investments in its Italian factories revamping its aging product lineup.

Fiat chairman John Elkann told reporters at the Detroit auto show last week that Marchionne, 61, will remain CEO through at least 2016 to manage what will now be the world’s 7th largest car company. The two companies sold about 4.4 million vehicles combined last year.

Fiat’s board of directors will meet at the end of January work out the details of the merger, including how the joint corporation will be organized, where the headquarters will be, and on which stock exchange the company will list its main stock listing, Elkann said. He also said that the merged company’s name will include both Fiat and Chrysler. At the Detroit show last week Marchionne said that the U.S. has a “large claim” as the location of the future headquarters, and that he prefers the New York Stock Exchange as the primary listing for the group. Marchionne also said that once the merger is complete, he would be open to additional partnerships with other automakers, such as PSA Peugeot Citroen and Suzuki though there is less urgency now that the merged company has “the credentials to be at the table” with top global automakers.

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24 Comments on “Fiat Completes Acquisition of Chrysler, Marchionne Open to Other Partners...”


  • avatar
    Avatar77

    I doubt Mrs. Marchionne will feel the same way.

  • avatar
    mike978

    I could see them extend their collaboration with Mazda. Chrysler/Fiat have minimal Asian exposure and Mazda is small with limited European sales. They are working together on the MX5/Alfa roadster project.

    • 0 avatar
      TMA1

      I’d hate to see Mazda get in bed with anyone again. They’re building great cars now. If they want to sell their vehicles under other brands, that’s something else. They’re supposed to start producing a subcompact for Toyota as well.

      • 0 avatar
        mike978

        I agree, but they need some scale and they have collaborations with Toyota (engineering the new Yaris) and with Alfa Romeo. So the concept is not alien to them to work with others.
        There is talk about if they buy an engine off someone for the new CX9 due in 2 years (which could also be used for Mazda 3 and 6 speed models)

  • avatar
    mjz

    Don’t rule out Opel either. Marchionne wanted it before and GM just might be willing to unload it. Imagine a merger of Opel, Peugeot/Citroen, Suzuki and Mazda, with FIAT/Chrysler. All have specific regional strengths, It would have huge economies of scale. They could call it MEGA Motors. Lol.

  • avatar
    ClutchCarGo

    “he would be open to additional partnerships with other automakers, such as PSA Peugeot Citroen and Suzuki”

    Three words: American Motors Corporation.

    How’d that work out, Sergio?

    • 0 avatar
      Vulpine

      Poor argument, Clutch. AMC hurt itself more with kitschy designs than they did with the few partnerships it held. GM, Ford and even Chrysler and carried far more partnerships over the years. Even today, much of what the various Jeep models are today came from AMC’s Jeep years. At least now they’re not buying engines and parts from other-owned brands. Back in the ’70s, you were as likely to see a GM engine in a Jeep with a Ford transfer case as the other way around. But AMC kept the Jeep as a standalone product that is gaining a foothold around the world today through Fiat/Chrysler. Everyone tries to ‘beat the Jeep’ and it seems every one of them continues to fail. Volkswagen has tried. Mercedes has tried. Rover has tried. Toyota has tried. Two of those four are not longer even trying, while the other two have become luxury vehicles rather than purpose-built off-road vehicles.

      • 0 avatar
        ClutchCarGo

        My point was that merging together multiple weak players (Nash & Hudson, then Jeep and finally Renault as a partner) is unlikely to produce a robust player in the auto world. Without clear synergies between mfrs, simply adding in players in an effort to gain volume efficiencies and benefits will not result in improved products. Instead, you’re all too likely to get reduced focus on core functions which can result in kitchy designs and unpopular products. What in the world would PSA or Suzuki bring to the Fiatsler table other than a loss of energies and focus?

      • 0 avatar
        RobertRyan

        @Vulpine,
        Toyota convincingly beats the Jeep outside the US. Still Jeep is the most iconic of US brands, Fiat is doing well with the brand.You will find that regionally other manufacturers “beat the Jeep” that includes VW, Mercedes, LR etc.

        • 0 avatar
          highdesertcat

          Yeah, I would look for certain re-badged Jeeps with Italian names making their way around the globe.

          Candidates I have in mind are the Grand Cherokee, new Cherokee and an off-shoot based on the Wrangler being marketed in Asia, Central and South America and to a smaller extent Europe and the Middle East.

          None of these would be made in the US however, but more likely, in the country where they are intended to be sold.

          Completing the acquisition was always just a formality. It was well understood that when Chrysler died, and Fiat was bribed with $1.3B to take that carcass off the taxpayer’s hands, that Fiat would own what was formerly known as Chrysler, lock, stock and barrel. Now they do.

          I say more power to Fiat! At least they provide jobs building cars for Americans in America, just like Toyota, Honda, Nissan, Hyundai/Kia and Subaru.

          • 0 avatar
            RobertRyan

            @Vulpine,
            I would say the SUV Jeeps will be big sellers. They already are. Wrangler more a NA thing. I see bigger SUV’s being developed to stave off increased competition from Europe and Asian manufacturers..

  • avatar
    thornmark

    Perhaps then Franco-American.

  • avatar
    Pastor Glenn

    Chrysler-Fiat + Mazda would probably be a terrific match, but Chrysler-Fiat + Suzuki & Maruti of India might even be a better match. (I’m thinking entirely globally here not US-centric).

    I don’t think Mitsubishi would be interested in “talking” with Chrysler given their “history”. Besides there might still be an active PPO out on Chrysler relating to Mitsubishi….. after their acrimoneous break-up (involving the trifecta of Daimler, which later dumped Chrysler but that’s another story).

  • avatar
    TheEndlessEnigma

    Daimler sucked Chrysler dry then threw it to the curb. I become concerned when I hear “….That gives Fiat access to Chrysler’s profits, needed to shore up the Italian automaker which is overexposed to the weak European market. Is Chrysler being set up to be sucked dry, again?

    • 0 avatar
      Pch101

      Chrysler wouldn’t exist today were it not for Fiat managing it out of bankruptcy.

      You could count the number of possible candidates for leading a GM and Chrysler recovery on one hand. Marchionne and Ghosn were the best that they could have hoped for, and they didn’t manage to land Ghosn.

  • avatar
    Viquitor

    Fiat has had a few JVs with Suzuki, most notably the Sedici/Sx4. Actually it was VW that jumped in and prevented Fiat and Suzuki to jump into bed together a few years ago. Suzuki needs a bigger partner much like GM once was. Suzuki is really strong in India and that is a market in which Fiat still struggles. Also, the Grand Vitara/Jimny tech would be a great way to start thinking about bringing smaller Jeeps to the market place than anything Fiat and Chrysler can come up with.

    Mazda could bring great engines and platforms to the table. The Mazda6 looks more like an Alfa Romeo than most things coming out of Milan these days. Also there’s the global Ford Ranger that is actually a Mazda design that could finally give Fiat their own Amarok, something they’ve been pursuing for years now.

    My bet is on both. Sergio is just the guy to make it all happen.

  • avatar
    mkirk

    So Fiat purchased Chrysler using a bunch of Chrysler’s money. Sort of like the ultimate cash on the hood incentive I guess.

    • 0 avatar
      Lorenzo

      That’s pretty much how takeovers work on Wall Street. The buyer borrows money to buy a target, and the target has to pay it off. Lots of well-run companies that kept low debt loads were laid low by their buyers’ debt, but their former owners walked away with a bundle.

  • avatar
    sitting@home

    “The United Auto Workers’ retiree healthcare trust, known as a voluntary employee beneficiary association or VEBA, received $3.65 billion in cash for its 41.46% stake in the Auburn Hills”

    I thought the whole reorganization thing was set up so that the UAW had an ownership incentive to improve the performance of the company. With a big pile of cash now sitting in the bank and no foot on the controls of the company, I expect another UAW executive golf retreat and unrealistic demands for wage and benefit increases to be coming soon.

    • 0 avatar
      Pch101

      The VEBA was a creditor in the bankruptcy.

      There wasn’t enough money to pay the VEBA for its claims against the old Chrysler.

      As a compromise, the VEBA took shares in the new Chrysler. Those shares could have turned out to be worthless if the turnaround effort failed.

      As it stands, the VEBA is not coming out of this whole. The VEBA took a haircut.


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