Fiat completes acquisition of Chrysler

  • By Brent Snavely Detroit Free Press
  • Tuesday, January 21, 2014 1:38pm
  • Business

DETROIT – Fiat said Tuesday it has completed a $4.35 billion deal to acquire all of Chrysler’s remaining shares from a union-managed trust.

The deal was scheduled to close by Monday but had to be delayed because banks were closed for the Martin Luther King Day holiday.

Completion of the deal brings to a conclusion Chrysler Group LLC and Fiat SpA CEO Sergio Marchionne’s nearly five-year quest to merge the two automakers both operationally and financially. It also effectively means that Chrysler is fully owned by Fiat, even though it will retain its presence in Michigan.

The deal also resolves a lawsuit between Fiat and the UAW trust over the value of the shares and averts a potentially complicated initial public offering for Chrysler that the United Auto Workers’ Retiree Medical Benefits Trust could have forced the automaker to undertake.

For the UAW Trust, which provides medical benefits to 117,000 UAW-represented Chrysler retirees, the deal provides much-needed funding.

The UAW Trust said it received $3.825 billion Tuesday and said the proceeds will be used to provide additional funding security for the health benefits for Chrysler retirees and dependents.

“We reached a successful conclusion that will benefit the trust’s retirees,” Robert Naftaly, chairman of the committee that governs the trust, said in a statement. “This was always our goal. As a result, the trust is stronger.”

Fiat became Chrysler’s controlling shareholder in 2009 when the Auburn Hills, Mich., automaker emerged from Chapter 11 bankruptcy.

Under the terms of agreement, Chrysler will contribute $1.9 billion and Fiat will contribute $1.75 billion to purchase the shares held by the UAW Trust. Chrysler also will pay $700 million more to the VEBA Trust in four equal annual installments.

The first annual payment, $175 million, will occur when the transaction closes. Additional $175 million payments will be made in the next three years on the anniversary of the initial payment.

A number of new questions must now be resolved now that Fiat and Chrysler are a unified company.

Marchionne said last week that Fiat’s board of directors will meet Jan. 29 to discuss a new name for the combined company, the stock exchange on which the company’s shares will be listed, and the location of the company’s headquarters.

The issue of the name is sensitive on both sides of the Atlantic. In Italy, where Fiat is the largest private-sector employer, workers and unions have been on edge for several years, concerned that Fiat’s focus has been shifting to North America.

Here in the U.S., memories still linger over the disastrous DaimlerChrysler marriage that was billed as a merger of equals in 1998.

“ ‘Fiat’ and ‘Chrysler’ will be in the name,” Marchionne said last week.

While Fiat shares now trade on the Milan Stock Exchange, Marchionne said last week it would make more sense for the combined company to be listed on a U.S. stock exchange.

“If you were to look at this objectively and you were trying to make a choice that reflected access to capital markets and the ability to finance operations and so on, then by definition, the United States would appear to have the large claim in terms of its right to at least the financial markets to house the combined Fiat/Chrysler,” Marchionne said last week.

“But I don’t want to speak out of turn. The board needs to take a look at this and make a determination,” Marchionne said.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

The livery on a Boeing plane. (Christopher Pike / Bloomberg)
Former Lockheed Martin CFO joins Boeing as top financial officer

Boeing’s Chief Financial Officer is being replaced by a former CFO at… Continue reading

Izaac Escalante-Alvarez unpacks a new milling machine at the new Boeing machinists union’s apprentice training center on Friday, June 6, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Boeing Machinists union training center opens in Everett

The new center aims to give workers an inside track at Boeing jobs.

Some SnoCo stores see shortages after cyberattack on grocery supplier

Some stores, such as Whole Foods and US Foods CHEF’STORE, informed customers that some items may be temporarily unavailable.

People take photos and videos as the first Frontier Arlines flight arrives at Paine Field Airport under a water cannon salute on Monday, June 2, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Water cannons salute Frontier on its first day at Paine Field

Frontier Airlines joins Alaska Airlines in offering service Snohomish County passengers.

Amit B. Singh, president of Edmonds Community College. 201008
Edmonds College and schools continue diversity programs

Educational diversity programs are alive and well in Snohomish County.

A standard jet fuel, left, burns with extensive smoke output while a 50 percent SAF drop-in jet fuel, right, puts off less smoke during a demonstration of the difference in fuel emissions on Tuesday, March 28, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Sustainable aviation fuel center gets funding boost

A planned research and development center focused on sustainable aviation… Continue reading

Helion's 6th fusion prototype, Trenta, on display on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Helion celebrates smoother path to fusion energy site approval

Helion CEO applauds legislation signed by Gov. Bob Ferguson expected to streamline site selection process.

Water drips from an Alaska Airlines Boeing 737 after it received a water salute while becoming the first scheduled 737 arrival Thursday, Feb. 17, 2022, at Paine Field Airport in Everett, Washington. (Ryan Berry / The Herald)
Boeing and Airbus forecast strong demand for their jets

Boeing and Airbus project more than 40,000 new jets are needed.

Hundreds wait in line to order after the grand opening of Dick’s Drive-In’s new location in Everett on Thursday, June 12, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Dick’s Drive-In throws a party for opening day in Everett

More than 150 people showed up to celebrate the grand opening for the newest Dick’s in Snohomish County.

Patrick Russell, left, Jill Russell and their son Jackson Russell of Lake Stevens enjoy Dick’s burgers on their way home from Seattle on Friday, Sept. 22, 2023 in Edmonds, Washington. The family said the announcement of the Dick’s location in Everett “is amazing” and they will be stopping by whenever it opens in 2025. (Olivia Vanni / The Herald)
Dick’s Drive-In announces details for Thursday’s grand opening in Everett

Dick’s will celebrate its second Snohomish County location with four days of festivities.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.