Fiat Gets A Deal On Chrysler: Majority For $1.27 Billion

Bertel Schmitt
by Bertel Schmitt
fiat gets a deal on chrysler majority for 1 27 billion

In a few months, Fiat will own 46 percent of Chrysler, Fiat announced today in Turin. With another 5 percent milestone reached by the end of the year, Fiat will have the 51 percent majority in Chrysler. According to Germany’s Automobilwoche [sub], the 46 percent level will be reached after Chrysler has paid back the government loans. Payment of the loans is expected for the second quarter of 2011.

According to Automotive News [sub], Fiat has agreed to pay $1.27 billion for the 16 percent stake in Chrysler. The deal turned out to be a little cheaper than the $1.5 billion expected last week.

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  • Robbie Robbie on Apr 21, 2011

    Can anyone explain to me how a car company that was bleeding money and had no new designs can now possibly be viable..?

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    • Doctor olds Doctor olds on Apr 22, 2011

      @high desert cat- The 51,000 US Chrysler employes in the U.S. , particularly 10,000 of them at their HQ in Auburn Hills MI working to design, develop and market Chrysler products might disagree on whether they are an American company or not. btw- Chrysler's HQ is full! They need more space for the engineers they are hiring. It never ceases to amaze how little folks here know about what it actually takes to run a car business. The most strategically important parts of the business, product development and administration, seem to be ignored in all the discussions about the value of saving these companies.

  • Buickman Buickman on Apr 21, 2011

    easy. quick rinse thru BK combined with a union leadership prostituting itself by crawling into bed for millions in VEBA admin fees. add in a gov't passing out more money in the name of plant modernizations and there you have it. trouble is the turniquets and bandaids haven't repaired the source of the bleeding...incompetent marketing management.

  • FleetofWheel FleetofWheel on Apr 21, 2011

    'Imported from Detroit' but owned and controlled from Italy. Chrysler can laugh off the incongruity of their domestic chest thumping with a TV spot featuring Lido Iacocca making some Italian-American quip.

  • Tparkit Tparkit on Apr 21, 2011

    "The deal turned out to be a little cheaper than the $1.5 billion expected last week." Wow - whocoodanode? I am shocked! ... almost as shocked as I will be to learn that not one dime of that $1.27 billion - or any of the remaining cash to gobble up Chrysler will actually come out of Fiat's pocket. Like GM, when corporate welfare puppy Fiat says "We give you your money back" they really mean it.

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    • Doctor olds Doctor olds on Apr 22, 2011

      @tparkit- Exactly what do you mean by "legitimate" bankruptcy proceeding? Who do you think would have financed it? (I suggest the only entity capable of doing so was government. After all, the credit freeze that collapsed car sales also made it virtually impossible for companies to borrow either.) Do you think customers would have continued to buy Chrysler products if they spent several years going through bankruptcy? (I doubt any financing for bankruptcy could have been obtained, but even if it could, I suggest it would have been a quick death spiral in a year or less, and would have cost taxpayers far more in the end with Chrysler being liquidated. Since they share suppliers, it likely would have collapsed the entire automotive sector, foreign transplants included, with a mind boggling cascade of bankruptcies.) Chrysler was pushed into bankruptcy by the global financial crisis, resulting credit freeze and collapse of the U.S. market in mid October '08. U.S. sales averaged 17M a year from 1999 to 2007, then fell to 13.5M in '08. That obscures the fact that most of that drop occurred in just the last 2 1/2 months of the year. Toyota lost money globally for the year and went on to lose even more than GM in the first quarter of '09 due to the weak U.S. market. The market bottomed at 10M in 2009, a nearly 40% drop from the norm. That is why Chrysler was burning through cash then, but still has the potential to be viable today.