Fiat Completes Buy-Out of Chrysler – Car Pro News

Fiat ChryslerFiat said it has signed an agreement to buy the remaining 41.46 percent stake it does not own in Chrysler Group from the UAW’s VEBA Trust, the last step needed before the Italian and U.S. carmakers can merge.
Fiat S.p.A. said the voluntary employee beneficiary association, which covers health care costs for 117,000 UAW retirees and family members, would receive $3.65 billion for the stake.
Chrysler also agreed to separately make a total of $700 million in four annual payments to the UAW’s trust fund.
The deal is expected to close on or before Jan. 20, Fiat said.
“In the life of every major organization and its people, there are defining moments that go down in the history books,” Sergio Marchionne, CEO of both carmakers, said in a statement. “For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments.”
Fiat Chairman John Elkann said in the statement he has been looking forward to this day since the rebuilding of Chrysler began in 2009.
“The work, commitment and achievement I have witnessed from Chrysler over the past four and a half years is nothing short of exceptional, and I take this opportunity to officially welcome each and every one of the people in the Chrysler organization to the integrated Fiat-Chrysler world.”
The deal will allow Chrysler to avoid an initial public stock offering.
Fiat will pay the trust $1.75 billion from cash on hand when the deal closes. The Turin-based company said it would not need to make any capital increase through a rights issue.
Chrysler will contribute $1.9 billion through a special dividend to complete the transaction for the 41.5 percent stake.
The $700 million will paid in a series of four, $175 million annual payments from Chrysler to the VEBA trust, but come with a change agreed to by the UAW.
With the payments, the UAW has agreed that its members will adopt the best practices in use in Fiat plants around the world, instead of those just in use within the United States, a Chrysler source explained.
Exactly how this will play out in still unclear. The UAW could not be reached for comment. No specific details were included in a separate statement issued by Chrysler.
Currently, under Fiat’s World Class Manufacturing system, its most productive plants in North America are the Windsor (Ontario) Assembly Plant, the Toledo (Ohio) Assembly Complex and the Dundee Engine plant in Dundee, Mich.
All three plants have achieved “bronze” status under the system’s scoring, which measures a broad array of manufacturing metrics and boils them down into a score on a 100-point scale. To achieve bronze status, the plant has to have a score of at least 60.
Other Fiat plants globally implemented World Class Manufacturing earlier than did Chrysler’s plants, and some have achieved silver or gold status.
A statement from the UAW trust fund called the deal “the best possible outcome” for its retirees.
“This agreement is in the best interests of the trust’s UAW Chrysler retiree members and their families who rely on the trust to provide vital health care benefits,” said Robert Naftaly, chairman of the committee that governs the trust.
The size of the transaction is lower than many analysts forecast. Banca Akros estimated in December that Marchionne would need to pay $4.5 billion for the holding.


Leave a reply

Your email address will not be published. Required fields are marked *


Copyright ©2018 Car Pro. All rights reserved.                                                      Team Access          Privacy          Terms of Service          Technical Support

Log in with your credentials


Forgot your details?


Create Account