Fiat SpA took a majority stake in Chrysler Group LLC when it completed the purchase of a 6 percent stake from the U.S. Treasury and a 1.5 percent holding from Canada that ended taxpayer ownership in the automaker.
Fiat, which paid $625 million for the holdings, increased its stake in Chrysler to 53.5 percent on a fully diluted basis, Chrysler said in a U.S. regulatory filing. Fiat also paid $75 million for governments’ right to buy the remaining stake held by the United Auto Workers union’s retiree health-care trust, of which $15 million goes to Canada, reported Bloomberg.
“With today’s closing, the U.S. government has exited its investment in Chrysler at least six years earlier than expected,” Timothy Massad, the Treasury Department’s acting assistant secretary for financial stability, said in a separate statement. Loans to Chrysler were set to mature in 2017.
Fiat consolidated Chrysler’s results from June 1, a sign of the rapid integration of the two carmakers since the Auburn Hills, Michigan-based manufacturer exited bankruptcy in June 2009. Fiat is scheduled to report its second-quarter earnings July 26, the first one to include Chrysler results.
Fiat, based in Turin, Italy, and Chrysler will have a single management structure soon, Sergio Marchionne, chief executive officer of both companies, said last week.
Marchionne, 59, is working on management changes as he moves to integrate the two companies. He plans to merge the carmakers to reduce costs and achieve a target of more than 100 billion euros ($140 billion) in combined revenue by 2014. The executive said in May that the timing of a merger hasn’t been decided, adding that a combination isn’t likely this year.
“With the business strategies of Fiat and Chrysler irrevocably linked, we believe a merger is a logical next step,” Stefan Burgstaller. a Goldman Sachs Group Inc. analyst wrote in a note to clients July 20.
Fiat, initially granted a 20 percent stake in Chrysler by the U.S. government, expects to hold 58.5 percent of the third- biggest U.S. automaker by the end of 2011, after getting 5 percent in return for developing a fuel-efficient car for Chrysler. The United Auto Workers union’s trust will have the remaining 41.5 percent of Chrysler at that time.
