Fiat SpA cut a deal on the purchasing of a 41.46% stake of Chrysler shares from the UAW Retiree Medical Benefits Trust (also known as Veba Trust), Fiat says in press release. As a result, the Turin-based carmaker that has already had more than 58.5% now has secured full ownership of Chrysler Group LLC.
Fiat, which will take over Chrysler in a $3.65 billion deal, is going to pay $1.9 billion first. The rest of the money the seller will get after the deal is completed. Moreover, Chrysler committed to give the UAW another $700 million. After the press release went out, the Italian carmaker’s stock price jumped 20% to €6.7 apiece. As of 2 p.m. Moscow time, the value ticked down to the level of €6.7 per share.
In case the deal is closed, there will no more necessity for the initial public offering to be issued. Chrysler filed for the IPO in late September 2013. That decision was affirmed by the Veba Trust which could not find a compromise with the Fiat over the price of a 41.46% package. The former estimated it at $10.3 billion, while the latter valued the stake at only $4.2 billion. It was expected the IPO to help the company to place 16.6% of shares at a reasonable price. The parties had been negotiating on this issue since 2011.
The UAW Trust gained the right to demand the IPO of Chrysler in 2009. In accordance to the agreement, Fiat and the UAW bought out the Chrysler’s shares and saved the latter from bankruptcy. Chrysler as well as other large carmakers suffered the auto industry crisis in 2008 when the financial havoc wreaked other sectors of the world economy.
