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Fiat will buy the rest of Chrysler for $4.35 billion

Thu, 02 Jan 2014

Fiat has announced that it will purchase the rest of Chrysler in a deal totaling $4.35 billion. Currently, the outstanding 41.6 percent stake in the company is owned by the UAW's voluntary employee beneficiary association, or VEBA, trust. Under the terms of the deal, Fiat won't shell out all $4.35 billion. Chrysler will raise $1.75 billion. Fiat will hand over $1.75 billion. VEBA will receive the remaining $700 million over the coming years in the form of four $175 million payments.

The Italian automaker's most recent major play for increased ownership in Chrysler came in June 2011, when it boosted is stake from 46 percent to a controlling 52 percent. It went on to purchase 6 percent from the United States Treasury and another 1.5 percent from the Canadian government.

The deal should benefit both Fiat, which is struggling in a difficult European market, and Chrysler, which won't have to undergo an initial public offering. Expect to see even more crossover between the two automakers' product pools -- if you liked the prospect of the Fiat Doblo-based Ram ProMaster City, Jeeps on Fiat platforms or, heck, a Chrysler 300 wearing Lancia badges, you should be thrilled by this news.

For its part, the UAW has agreed "to certain commitments to continue to support the industrial operations at Chrysler Group and the further implementation of the Fiat-Chrysler alliance, including to use best efforts to cooperate in the continued roll-out of Fiat-Chrysler World Class Manufacturing programs," according to a densely worded statement from Chrysler. In practical terms, this means United States-based Fiat-Chrysler plants will adopt efficiency- and quality-oriented manufacturing practices already rolled out across the rest of the world.

By Graham Kozak