Fiat ready to pay $125 million for Canada’s stake in Chrysler

Article by Christian Andrei, on June 5, 2011

Sergio Marchionne said during the past weekend that Fiat is quickly moving to strengthen its control of Chrysler Group LLC and is offering $125 million to acquire the Canadian government's stake in the U.S. automaker.

Marchionne is the CEO of both Fiat and Chrysler. This offer was reported only two days after the U.S. Treasury entered a deal to sell Fiat the 6% equity stake left in Chrysler amounting to $500 million, increasing the shares that Fiat holds in Chrysler to 52%.

Fiat has been managing Chrysler ever since a 2009 bailout that made the Italian group acquire 20% of Chrysler. Fiat also has the option to gradually increase its stake under the right conditions.

Meanwhile, the Canadian government has a 1.7% holding in Chrysler. At the sidelines of a conference last Saturday, Marchionne said that Fiat presented the Canadian government an offer for its stake in Chrysler last Thursday.

He added that a Chrysler IPO won’t be necessary anymore if Fiat enters an agreement with the UAW's retiree health care trust (known as the VEBA) over the fund's 45.7% stake in Chrysler.

Already, Fiat has an option on 40% of VEBA's shares and is paying $75 million for the U.S. Treasury's option to purchase all Chrysler shares that the UAW trust holds. Marchionne also said that Fiat bought the right to purchase the shares that VEBA is holding to guarantee that there won’t be anyone else to take control of the company.

Topics: fiat, chrysler, canada

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