MILAN (AP) -- The Italian carmaker Fiat says its acquisition of the final Chrysler stake is complete, making the U.S. car company a wholly-owned subsidiary of Fiat.
Fiat SpA said Tuesday that it closed the deal announced Jan. 1 with the cash payment of $1.75 billion to a union-controlled trust fund. That's on top of an initial $1.9-billion payment, which was arranged through a special distribution from Chrysler. Fiat also made the first installment on an additional $700 million payment.
Fiat has been running Chrysler since 2009, but lacked full control until Fiat-Chrysler CEO Sergio Marchionne won a hard-fought deal with the minority stakeholder. The deal gives Fiat a freer hand to push deeper integration and decide where the joint company will be based and listed, as well as its name.
The relevant press release from Fiat:
Fiat S.p.A. completes acquisition of remaining equity interests in Chrysler Group LLC from VEBA Trust
Fiat S.p.A. (“Fiat”) through its wholly owned subsidiary, Fiat North America LLC (“FNA”), today completed its previously announced acquisition of all of the VEBA Trust’s membership interests in Chrysler Group LLC (“Chrysler Group”). Chrysler Group is now a wholly-owned subsidiary of Fiat.
The consideration for the acquisition consisted of:
- a special distribution paid by Chrysler Group to its members on January 21, 2014 of U.S.$1,900 million (FNA directed its portion of the special distribution to the VEBA Trust as part of the purchase consideration); and
- a cash payment by FNA to the VEBA Trust of U.S.$1,750 million.
Fiat funded the U.S.$1,750 million payment from available cash on hand. Chrysler Group funded the special distribution from available cash on hand.
As previously announced, contemporaneously with the transactions described above, Chrysler Group and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the “UAW”) entered into a Memorandum of Understanding under Chrysler Group’s existing collective bargaining agreements to provide for additional contributions by Chrysler Group to the VEBA Trust of an aggregate of U.S.$700 million in four equal annual installments, the first of which was paid in connection with closing of the transaction with Fiat.
As part of the transactions and as promptly as practicable, FNA and the VEBA Trust will dismiss with prejudice the proceedings before the Delaware Court of Chancery with respect to the interpretation of the call option agreement.
For more insight on Fiat's takeover of Chysler, be sure to check out 'Is Chrysler An "American" Automaker Any More?'