Fiat has inked an agreement with UAW’s Voluntary Employee Beneficiary Association (VEBA) to acquire the trust’s 41.46 percent stake in Chrysler Group for $3.65 billion. The agreement is the last hurdle that Fiat has to clinch before it could proceed with its planned merger with its Chrysler unit. Chrysler also agreed to separately pay $700 million in four yearly installments of $175 million to VEBA.
The Italian carmaker said the agreement will close or on before January 20. "In the life of every major organization and its people, there are defining moments that go down in the history books," Sergio Marchionne, chief executive of both Fiat and Chrysler, said in a statement, noting that the agreement with the VEBA is “one of those moments."
Fiat Chairman John Elkann said in the statement that he been looking forward to the agreement since Chrysler’s rebuilding started 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," Elkann said.
The agreement, which will enable Chrysler to avoid an initial public offering, entails Fiat paying VEBA $1.75 billion from cash on hand when it closes. Following the agreement, Fiat said would not need to make any capital increase through a rights issue. To complete the sale, Chrysler will contribute $1.9 billion through a special dividend. [source: Chrysler]