Fiat Completes Acquisition of Chrysler, Marchionne Open to Other Partners

TTAC Staff
by TTAC Staff

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.

TTAC Staff
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  • 95_SC 95_SC on Jan 22, 2014

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

    • Lorenzo Lorenzo on Jan 22, 2014

      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.

  • Sitting@home Sitting@home on Jan 22, 2014

    "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.

    • Pch101 Pch101 on Jan 22, 2014

      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.

  • TheMrFreeze That new Ferrari looks nice but other than that, nothing.And VW having to put an air-cooled Beetle in its display to try and make the ID.Buzz look cool makes this classic VW owner sad 😢
  • Wolfwagen Is it me or have auto shows just turned to meh? To me, there isn't much excitement anymore. it's like we have hit a second malaise era. Every new vehicle is some cookie-cutter CUV. No cutting-edge designs. No talk of any great powertrains, or technological achievements. It's sort of expected with the push to EVs but there is no news on that front either. No new battery tech, no new charging tech. Nothing.
  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
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