Fiat has announced that it has reached a deal to buy an additional 16% stake in Chrysler, taking its stake to 46% and bringing the two companies even closer together.
Fiat said it has reached an agreement with Chrysler Group LLC and the other members of Chrysler regarding a call option which will be exercised at an aggregate price of US$1,268m. Fiat said the deal would be completed during the second quarter and would include loans from the US and Canadian governments being ‘fully repaid’. Upon completion of the transaction, Fiat’s interest in Chrysler will increase by an incremental 16%.
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“The transaction that we are announcing today,” said Chairman of Fiat, John Elkann, “represents a historic step for Fiat and Chrysler and is a source of great satisfaction and pride for both. Fiat, together with Chrysler, will create a stronger automobile group, with a full range of products, present in every market around the world and able to compete with the best. Over the past couple of years, Fiat and Chrysler have worked side by side with commitment and mutual respect. With the contribution of everyone who works with us and with the full support of myself and my family, from today this spirit of collaboration will become even stronger, as we continue to produce appealing, fun, safe and eco-friendly automobiles.”
Fiat CEO, Sergio Marchionne, said: “This is a fundamental step toward completion of the momentous integration of Fiat and Chrysler, initiated less than 2 years ago, that will result in the creation of a global automaker.
“We have chosen to accelerate the pace to bring about, in the shortest possible time, the birth of a single group capable of fully leveraging the joint development of the respective international activities.”
Marchionne highlighted Chrysler’s turnaround and eyed a further 5% stake, which would take Fiat’s Chrysler stake to 51%.
“Chrysler is undergoing an extraordinary industrial and financial turnaround and Fiat is ready to take control, in order to bring even greater stability and strength to the relationship in the interests of both. The transaction announced today, together with the expected achievement of a further 5% interest before year end, will enable us to bring to fruition the vision upon which the alliance was founded: the creation of an efficient and competitive global automaker, possessing advanced technologies and the determination to establish itself as a leader in the sector.”
Chrysler Group will announce financial results for the first quarter of 2011 on May 2, 2011.
