Fiat to Acquire 100 per cent stake in Chrysler

Thursday 06 June 2013, 10:02 AM by

The Italian car maker, Fiat, played a key role in saving the Detroit-based automotive company Chrysler from going bankrupt back in 2009. Fiat currently own 58.5 per cent stake in the American car manufacturing company. However, now Fiat is planning to acquire full ownership of the Chrysler, which will help it to expand its business. The car maker is in talks with the United Auto Workers’ Retiree Healthcare Trust, which owns the remaining 41.5 per cent share in Chrysler. If everything goes positively and Fiat manages to convince the trust, then the world will soon witness Fiat taking over the Chrysler.

However, there is one hiccup in the path of Fiat to take over Chrysler. The actual value of the remaining 41.5 per cent stake is being questioned and is estimated to cost around INR 20,000 crore. However, the final value will be decided upon by a legal ruling. This decision by the Italian car maker to purchase the remaining stake in the American company was fuelled by the selling a stake in Swiss inspection firm, SGS by Exor, which is the parent company of Fiat. Exor sold its 15 per cent stake to make a profit of Rs. 11,099 crore.

As per the sources, Sergio Marchionne, Head, Fiat is determined to buy the complete stake in Chrysler by the end of Summer, 2013. The car maker has approached several banks to help finance the takeover, it will then merge debts of both the companies into a single entity and pay at lower interest rates. It is also speculated that Fiat share issue will be on the agenda of the car maker to help in financing the whole deal. Also, the full ownership in Chrysler may also mean that the Italian car maker will move its headquarters from Italy to the shores of North America.

In an interview with the editor of the Repubblica newspaper, Marchionne quoted, “We will succeed in doing it. We and VEBA (the United Auto Workers pension fund, a Chrysler shareholder) have different opinions on the value of Chrysler but we will resolve the problem in 2014.”