Fiat buying rest of Chrysler in $4.35 billion deal, IPO avoided – Autoblog.
Chrysler will now become a wholly owned member of the Fiat family, as it’s been announced that the 41.46-percent stake in the Auburn Hills, MI-based manufacturer owned by the United Auto Workers’ VEBA trust fund will be sold to the Italian company. Concluding the agreement will mark the closure of a piecemeal purchase process that could have resulted in an initial public offering.
The total cost of the sale will see the VEBA healthcare trust receive $4.35 billion, $3.65 billion of which will come from Fiat. $1.75 billion of that will be cash, while an additional $1.9 billion will be part of a “special distribution.” An additional $700 million will be paid over four separate installments according to reports from Automotive News Europe and USA Today, although the shares will belong to Fiat following the first payment. The deal was reportedly initially struck on Sunday (though it is just being announced today), and is being portrayed as particularly good news for Fiat and Chrysler, which have now prevented the remaining shares going to the stock market in a UAW-forced IPO.
“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.
As part of the agreement, the UAW will adopt the “best practices” of Fiat factories from across the globe in its own plants, although it hasn’t been explicitly stated what these are and how they will come about.
Overall, this move comes as something of a surprise, as all indications pointed to a Chrysler IPO at some point in January. As recently as December 23, the two parties were reported back at the bargaining table, though, where this finalized deal was likely hammered out. There’s a short press release from Chrysler available below if you want to read the rest of the corporate-speak skinny.
Interesting reading on the subject of Lutz vs Eaton at Mother MOPAR
http://www.allpar.com/history/interviews/chris-theodore/fall-and-rise.html
I’d still like to think that if Iacocca hadn’t been so pig headed and left the company to Bob Lutz instead of Bob Eaton Chrysler might have survived. It wasn’t that long ago that LH models, PT Crusiers, and RAM pick ups were bring in lots of cash for pre-Daimler Chrysler. Chris Theodore had the Magnum, Charger, and 300 ready for production, and a third generation NEON was awaiting approval. Chrysler still held the honor as the world’s best selling minivan and convertible, and I believe they had a shot at the future. Daimler came in, took the billion dollars of reserve cash, replcaed the NEON with the POS Caliber, severed the Mitsubshi relationship, and almost lost the RAM truck business. Daimler damaged Chrysler so badly I guess the FIAT deal was all they had left.
I’ll continue to be a Blue Oval customer as I do beleive that FORD builds the best cars sold in America today. I hope they continue, as I really do not want to change brand loyalty anytime soon, nor start the import car habit.
This is a sad day for us MOPAR orphans. I truly wonder what Lee Iacocca thinks about this after so much hard work to save the company years ago.
Well I have to say I agree, it is sad. I’ll spare everyone my “I know what went wrong with U.S. car manufacturing” diatribe, but anytime we lose a US corporation (car manufacturing or not) it’s a blow to your economic and self reliance. More importantly, and this maybe just because I’m older and more nostalgic these days, its a piece of our nations living history dieing off. Having spend some time in Italy this past fall, FIAT is huge and their cars are built to last. They have to be, the driving there in the big cities is tough….much worse then most of our road…YES….even here in Arizona. Interesting enough. I saw a lot of Chevys and Fords in Italy, in the big cities (Rome and Florence) and even out in the rural wine country. Do you know the number of Chryslers I saw there – 2. Maybe that will change for Italians but it’s a loss for us.