Make / Model Search

News - Fiat

Fiat takes majority share in Chrysler

Apple pie: A North American Fiat 500 in production at Chrysler’s Toluca assembly plant in Mexico.

US, Canadian taxpayers free of Chrysler ties as Fiat gears up for full integration

22 Jul 2011

A MERGER between Fiat and Chrysler is now anticipated after the Italian auto giant this week took a majority shareholding in Chrysler Group LLC by purchasing the US treasury’s six per cent stake and the Canadian government’s 1.5 per cent holding.

These were the last remaining US and Canadian taxpayer interests in Chrysler and now hand Fiat a 53.5 per cent share in the Detroit car-maker – a stake that will increase to 58.5 per cent later this year when Fiat exercises its right to a further five per cent in return for putting into production a fuel-efficient car for Chrysler.

In a statement released yesterday (July 21), Fiat said it had paid $US500 million for the US government’s remaining stake and $US125m for Canada’s share, and had also paid the US treasury a further $75m – $15m of which goes to Canada – for the option of purchasing the remaining share in Chrysler held by the United Auto Workers’ healthcare trust VEBA.

In a separate statement, the US treasury highlighted how quickly it had untied its multi-billion-dollar bailout of Chrysler, which enabled the company to exit chapter 11 bankruptcy under Fiat control two years ago.

“With today’s closing, the US government has exited its investment in Chrysler at least six years earlier than expected,” said assistant secretary for financial stability, Tim Massad.

 center imageLeft: Fiat and Chrysler CEO Sergio Marchionne.

“This is a major accomplishment and further evidence of the success of the administration’s actions to assist the US auto industry, which helped save a million jobs during the worst economic crisis since the Great Depression.” In total, the US treasury said it had committed $US12.5 billion to both the ‘old’ (pre-chapter 11) and new Chrysler organisations under its automotive industry financing program, which came under its Troubled Asset Relief Program (TARP).

With the closing of the transaction this week, and Chrysler’s Group’s full repayment of loans and interest in May, the US treasury said that more than $US11.2 billion had been returned to taxpayers through principal repayments, interest and cancelled commitments.

However, treasury admitted that it was unlikely to fully recover the difference of $US1.3 billion owed by the ‘Old Chrysler’ and that it “does not expect a material recovery from those assets”.

Fiat is continuing to restructure Chrysler under CEO of both companies Sergio Marchionne, who will announce Fiat’s second-quarter earnings next week (July 26).

Overseas reports indicate that a single management structure will be announced soon as the two car-makers work towards a merger, reducing costs along the way in order to achieve a target of more than €100 billion ($A132.9 billion) in combined revenue by 2014.

A public share float on the New York Stock Exchange is expected to occur next year.

The Road to Recovery podcast series

Read more

Click to share

Click below to follow us on
Facebook  Twitter  Instagram

Fiat articles

Motor industry news

GoAutoNews is Australia’s number one automotive industry journal covering the latest news, future and new model releases, market trends, industry personnel movements, and international events.

Catch up on all of the latest industry news with this week's edition of GoAutoNews
Click here