Fiat has reached an agreement with the VEBA trust which holds 41% of Chrysler Group LLC to purchase these shares for US$3.65bn, thus paving the way for a full merger between Fiat and Chrysler. The transaction, which allows Chrysler to avoid an IPO, is set to close on or before 20 January.
Fiat and Chrysler CEO Sergio Marchionne notes in a media release, “In the life of every major organization and its people, there are defining moments that go down in the history books. For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments.” He added, “The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization that will ensure all employees a challenging and rewarding environment.”
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According to the terms of the deal:
- the purchase price will be split into two tranches
- Fiat says funds will be paid from available cash on hand
- Chrysler will provide additional contributions to the VEBA Trust
- these contributions will be four equal annual installments totaling US$700m
