The rumors were true this time: on January 1, 2014, Fiat announced an agreement with the VEBA Trust (The Voluntary Employees’ Beneficiary Association), under which its wholly owned subsidiary, Fiat North America LLC, will acquire the VEBA Trust’s 41.4616% of Chrysler Group shares that is doesn’t currently hold.
Expected to close on or before January 20, 2014, the transaction gives Fiat complete control of Chrysler Group, with the Italian carmaker avoiding an IPO. The VEBA Trust will receive aggregate payments of $3.65 billion, plus $700 million in four equal annual installments.
The sums will be broken down as follows: Fiat will pay VEBA $1.75 billion from cash on hand when the deal closes, while Chrysler will contribute $1.9 billion through a special dividend to complete the transaction for the 41.5 percent stake.
The remaining $700 million will be paid by Chrysler Group in four annual payments each worth $175 million. The initial payment will be made on closing the transaction with Fiat, with additional payments to be made on each of the next three anniversaries of the initial payment.
In exchange for these contributions, the UAW (International Union, United Automobile, Aerospace and Agricultural Implement Workers of America) “will agree to certain commitments to continue to support the industrial operations at Chrysler Group and the further implementation of the Fiat-Chrysler alliance,” reads the official statement.
“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,” said Sergio Marchionne, Chief Executive of Fiat and Chairman and CEO of Chrysler Group.
Marchionne now has green light to merge Fiat and Chrysler into one global carmaker, estimated by the executive to be the world's seventh biggest automotive player.
By Dan Mihalascu