Fiat SpA (Fiat) announced yesterday that they had come to an agreement with #Chrysler's second largest shareholder, VEBA, where it's U.S. subsidiary, #Fiat North America LLC (FNA) will acquire VEBA's 41.5 percent stake in Chrysler. This transaction is expected to close by January 20, 2014.
VEBA will receive $3.65 billion for it's stake in Chrysler. Fiat will pay $1.75 billion of that in cash. The remainder will be provided in the form of special dividends to Chrysler shareholders. Fiat will donate it's own share to VEBA. Chrysler Group will make further contributions to VEBA, up to $70 million in four annual instalments, the first of which will be paid when the agreement is formalized. Further instalments will be paid annually for three years. The UAW (United Auto Workers) union is committed to supporting the activities of the new entity.
"I've been waiting for this moment since the day in 2009 when we were chosen to rebuild Chrysler," said John Elkann, Chairman of Fiat. "The hard work, commitment and achievements of Chrysler during the last four and a half years are nothing less than exceptional, and I take this opportunity to welcome each of Chrysler's employees to this new world that is Fiat-Chrysler."
Sergio Marchionne, CEO of Fiat and Chairman and CEO of #Chrysler Group had this to add: "In the life of all major organizations and their employees, there are highlights that go straight into the history books. Fiat and Chrysler reaching this agreement with VEBA is clearly one of those times. I will always be grateful to the management team for the support and unwavering commitment demonstrated as this integration project finally takes shape. This unified structure will now enable us to fully define our vision as a world builder quite unique in terms of experience, perspective and expertise, a strong and open organization that offers its employees a challenging and rewarding environment."
With this agreement, the lawsuit that pitted Fiat and VEBA against each other will be removed from the Court of Delaware. Note that VEBA asked five billion dollars to sell its shares to Fiat, preventing it from fully merging with Chrysler. With the outcome of these negotiations, legal action that had been taken against Chrysler Group will likely be discontinued.
Fiat was eager to complete this transaction because the European market has been in free fall for several years. Without Chrysler in its portfolio, Fiat would be in serious trouble. In fact, Chrysler has had an exceptional year in 2012 (2013 figures are not yet known) with a profit of 1.7 billion. Without this contribution, Fiat would have suffered heavy losses this year.
We wish Chrysler wish a better future than it had in the lap of Daimler.
By Linda Aylesworth - autoExpert.ca