Fiat will need more money to take total control of Chrysler

Article by Christian A., on December 12, 2012

Fiat may have to spend more in order to take total control of Chrysler as a court decision on a price dispute continues and as Chrysler's possible share flotation is impending. Fiat presently holds 58.5% of Chrysler. It has a right to acquire 16.4% more for the next three years at a price based on a formula developed in 2009 when Chrysler was emerging from bankruptcy.

However, a dispute with regards to the price is now in a Delaware court, which will rule if Fiat has to pay as much as $1.70 billion as required by the UAW's VEBA, the union's retiree healthcare trust, to get the shares. The ruling isn’t expected to come before the end of 2012. Brian Quinn, a professor at Boston College Law School, said that this would work in VEBA's favor.

Quinn said that if Fiat hopes to get this resolved by the end of this year, it will have to be a settlement. What VEBA hopes to get is double the $754 million Fiat has computed to be the worth of the stake, according to the formula. Presently, Fiat and VEBA are not near to any resolution yet. Fiat hopes to acquire VEBA's stake, and VEBA wants to get Fiat's cash. Fiat is the only buyer.

This will change starting next year on January 1 when VEBA gets the right to sell a portion of its Chrysler stake in an initial public stock offering. VEBA gets significant leverage in any future talks with Fiat and can make what Fiat pays for a lot more expensive. Last October, Fiat-Chrysler CEO Sergio Marchionne said that the legal dispute may be tied up by the end of 2012 but according to law experts, this matter may last for many months.

Topics: fiat, chrysler

If you liked the article, share on:

Comments

Recommended

Opel revealed it has sweetened the pot for 2017 Insignia Grand Sport customers with the Opel Exclusive program. Through this program, the brand hopes to introduce a wide selection of...
by - February 22, 2017
Fireball Performance Cars has been known to make the fastest sixth generation LT1 Camaros in the world. Once again it has managed to walk the talk as it hit a...
by - February 22, 2017
The North American unit of German premium carmaker BMW is recalling around 19,000 units of its BMW i3 electric vehicle because of the risk of fuel leak. You may ask,...
by - February 22, 2017
A publication by the U.S. Patent and Trademark Office revealed that Honda is still looking into the Project 2&4 Concept. Officially unveiled during the 2015 Frankfurt Motor Show, the Project...
by - February 22, 2017
Barely a month before its official debut, Hyundai gave everyone a taste of what’s to come with the 2017 Hyundai i30 Wagon. Despite what little was shown, it did not...
by - February 22, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries