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Christopher Bruce2014-01-22 13:23:11

Fiat Officially Completes Purchase of Chrysler

Chrysler is now a wholly owned subsidiary of Fiat

 
 
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Marchionne has been trying to complete the purchase of Chrysler since 2009

It took about five years, but after years of negotiations and at least one court case, ChryslerChryslerChryslerUnited States of America, 1925 > present70 models
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is officially a wholly owned subsidiary of FiatFiatFiatItaly, 1899 > present159 models
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. The purchase became official on January 21 when Chrysler paid $1.9 billion to the VEBA Trust and Fiat North America paid $1.75 billion into the trust. Both payments were funded with cash on hand.

Fiat CEO Sergio Marchionne has been attempting to complete the purchase of Chrysler since it bought its stake in the company in 2009. Fiat had the right to by Chrysler stock in 3.3% sections every six months, but cost of the stock was disputed very early on. VEBA, which owned the stock, said that the price should be based on the current valuation of the company, but Fiat felt that each 3.3% of stock should have the same price based on the original 2009 purchase.

The two sides eventually found themselves in court over the price dispute, but the results were inconclusive. The judge said that VEBA was asking too much, but Fiat’s price was too low.

VEBA exercised its right to take Chrysler public and have the company listed on the New York Stock Exchange. It was considered a marketing tactic at the time because if the company were listed, the price would have likely risen beyond what Fiat could afford. It sped up the negotiations and made it likely that the merger would be completed by the first quarter of 2014 when Chrysler would have been listed.

Chrysler will also pay $700 million to VEBA in four equal, annual installments to continue the existing collective bargaining agreement between the United Auto Worker labor union and Chrysler.

The next step for the merger is not entirely known. Fiat has been rumored to move its headquarters to the United States to take advantage of more favorable US taxes. Fiat also plans to build JeepJeepJeepUnited States of America, 1941 > present33 models
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models in Italy to take up capacity at its underutilized factories there.

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