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.
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