Fiat plans to exercise an option to buy a further 3.3% in Chrysler from a retiree healthcare trust fund affiliated with the United Auto Workers union.

It is unclear if the voluntary employee beneficiary association called VEBA, will accept the offer, believed to be worth US$198m. Fiat and the trust are still locked in a legal battle over the price of another 3.3% stake Fiat attempted to buy last year. A decision by a Delaware court over that deal is not expected for several months.

Fiat now owns 58.5% of Chrysler, while the UAW retiree trust owns the rest. If the sale of both 3.3% stakes goes through, Fiat will own 65.17% of the US carmaker.

Chief Executive Sergio Marchionne, who runs both automakers, is intent on Fiat gaining full control of Chrysler, allowing Fiat to restructure its debt, boost earnings and support its struggling European operations.

The UAW trust, which manages medical benefits for 824,000 retirees, is seeking to maximize the holding's value to cover escalating healthcare costs. The trust took the stake in Chrysler during the carmaker's government-financed restructuring in 2009. As part of that restructuring, Fiat was given the right to buy 16.4% of Chrysler in tranches of up to 3.3% until 2016.

Fiat and VEBA have been wrangling over Chrysler's value in court since September, following a knock-back of Fiat's offer of US$139.7m for the 3.3% stake.

VEBA says its 41.5% stake in Chrysler is worth US$1.7bn, while Fiat puts the value at UD$754m.