FIAT has completed its buyout of Chrysler, making the US business a wholly-owned subsidiary of the Italian car-maker as it gears up to use their combined resources to turn around its loss-making operations in Europe.
The company announced on 1 January that it had struck a $4.35bn (£2.6bn) deal – cheaper than analysts had expected – to gain full control of Chrysler, ending more than a year of tense talks that had obstructed chief executive Sergio Marchionne’s efforts to create the world’s seventh-largest car maker.
Fiat said yesterday that it had completed the acquisition of the remaining 41.46 per cent stake in Chrysler from a retiree healthcare trust affiliated with the United Auto Workers (UAW) union. The trust, known as a voluntary employee beneficiary association, or VEBA, received $3.65bn in cash for the stake, $1.9bn of which came from Chrysler and $1.75bn from Fiat.
The Chrysler buyout talks have been closely watched by debt and equity investors because Fiat’s long-term plan to cut losses in Europe depends on its ability to deepen ties with Chrysler.
The US business is now a profit center for Fiat, but the two companies are still forced to manage their finances separately.
City A.M. Reporter