News - Fiat
Fiat completes Chrysler buyout
US icon Chrysler is now a wholly-owned subsidiary of Italian car-maker Fiat SpA
22 Jan 2014
FIAT completed its takeover of Chrysler overnight, turning the American car-maker into a wholly-owned subsidiary in a $4.35 billion ($A4.94b) deal.
The Italian company announced on January 1 that it had struck a deal to acquire the remaining 41.5 per cent of Chrysler from a retiree healthcare trust affiliated with the United Auto Workers (UAW) union after a protracted period of negotiations.
The trust, called VEBA, receives $A4.15b in the deal: $A2.16b from Chrysler and $A1.99b from Fiat North America, a subsidiary of Fiat SpA.
Under existing collective bargaining agreements, Chrysler will also pay the UAW an additional $A795 million divvied up over four annual instalments.
The completion of the deal paves the way for the Italian and US companies to better pool their resources, and should fast-track Fiat’s recovery in a stagnant Europe.
This encompasses a sharing of technology, vehicle architectures and platforms, distribution networks, production facilities and engineering and management resources.
The Fiat Chrysler Group consists of mass-market brands Fiat and Chrysler, off-road specialist Jeep, European luxury brands Maserati, Ferrari, Alfa Romeo and Lancia, and US-centric brands Dodge and its performance arm SRT.
Plans in action include pushing the Alfa brand further upmarket, reducing Ferrari production to improve exclusivity, expanding Maserati volume with new sedan and SUV models, moving Jeep into the B-segment SUV race with a Fiat 500-based hatch due to launch in Geneva in March this year, and boosting Chrysler volume in the US through its brand new 200 sedan.
Fiat SpA CEO Sergio Marchionne estimates the new company to be the world’s seventh-largest car-maker. Combined, the pair sold around 4.4 million vehicles in 2014, less than half that of Toyota, Volkswagen AG and General Motors.
Meantime, Fiat chairman John Elkann told journalists in Detroit last week that Mr Marchionne would remain as CEO through until at least 2016.
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