Fiat Group is planning to exercise an option to buy another 3.3-percent stake in Chrysler Group from the United Auto Workers' retiree health-care trust despite an ongoing lawsuit over the price of an earlier stock acquisition. Fiat Chairman John Elkann remarked that they will keep on doing what they have "done in the past" under terms of an agreement to purchase's Chrysler shares every six months from the trust known as Voluntary Employees' Beneficiary Association (VEBA).
Fiat is still aiming to merge its operations with Chrysler into one company, Elkann said. Fiat had already acquired a total of 6.6-percent stake in Chrysler from VEBA since mid-2012, and can exercise the next purchase option starting July 1, 2013.
But the Italian carmaker has yet to take ownership of the stake until its value is determined by a Delaware court. Fiat currently holds a 58.5-percent stake in Chrysler, except the stake in question, while VEBA still controls the remaining 41.5 percent.
Fiat and Chrysler chief executive Sergio Marchionne is targeting to merge the two carmakers "as soon as possible" to create a company that is large enough to rival global leaders Toyota Motor Corp., General Motors Co. and Volkswagen Group. For the merger to consummate, Fiat has to fully own Chrysler by buying out its remaining owner, VEBA.
On June 7, 2013, Marchionne disclosed that the Italian carmaker is holding talks with the union on a settlement." Elkann said that they should let the "discussion run its course." Fiat Delaware Chancery Court Judge Donald Parsons in 2012 to rule that a call-option agreement covering the first 3.3 percent holding bought from VEBA carries a value of $139.7 million. VEBA, however, claims the stake is worth $342 million. [source: Bloomberg]