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.