Fiat buys out Chrysler from US pension fund in $4.35 billion deal
Fiat has agreed to buy out Chrysler from VEBA healthcare trust in a $4.35 billion (Rs 26,949 crore) deal. Of the $4.35 billion, Fiat will pay VEBA $3.65 billion ? $1.75 billion of which will be cash and the remaining $1.9 billion will be part of a "special distribution". This will make Chrysler a wholly owned part of the Fiat Group.
Chrysler is now a fully owned part of the Fiat family
The remaining $700 million will be paid to VEBA by Chrysler over four equal annual installments. The deal is likely to be completed by January 20. The first installment will be made "on closing of a transaction in which the VEBA Trust will sell to Fiat North America, one of Fiat's wholly owned subsidiaries, all of the VEBA Trust's equity interest in Chrysler", a press release by Chrysler and VEBA Trust stated on Wednesday.
Hit hard by the 2008 US slowdown, Chrysler filed for bankruptcy in 2009. It emerged from the bankruptcy proceedings with the United Auto Workers (UAW) pension fund, Fiat, and the US and Canadian governments as principal owners. Over the next few years, Fiat gradually acquired shares from the US and Canadian Treasury to take majority ownership of the company.
The latest deal with UAW means that Fiat will now own the remaining 41.46 per cent stake in the American manufacturer held by United Auto Workers' VEBA trust.
"The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization that will ensure all employees a challenging and rewarding environment," Fiat CEO Sergio Marchionne said in a statement.
The deal, announced on Wednesday, avoids an initial public offering of Chrysler stock that would have complicated merger of the companies.