Report: Fiat to raise its Chrysler Group stake to 30 percent

Article by Christian A., on April 4, 2011

In the upcoming weeks, Fiat S.p.A. seeks to raise its Chrysler Group stake to 30% as soon as it gets clear of two U.S. government obstacles related to getting the increased holding, according to two sources. Reportedly, CEO Sergio Marchionne is planning to sell Chrysler models under the Fiat brand in Brazil to achieve its first target that 90% of Fiat's Latin American dealers should be able to offer Chrysler vehicles.

One insider said that this plan will enable Marchionne to avoid having to engage in talks with dealers about Chrysler contracts. The company will also be able to elude the cost of presenting the brand in Brazil, whose largest share of the market is owned by Fiat.

Already, Fiat has complied with the second demand to reach $1.5 billion in revenue outside North America at Chrysler (starting with the period when Fiat took a stake in Chrysler). Presently, Fiat owns 25% of Chrysler.

However, it will receive 5% more of the U.S. government's holding in Chrysler as soon as the Treasury Department is convinced that the two conditions were met. With this increase, Marchionne may just be able to attain a 51% stake by the end of this year. Fiat is set to acquire the initial 35% without having to pay cash but it would then have to purchase the remaining 16%.

JPMorgan analyst Ranjit Unnithan, who has given the stock an “underweight" rating, said that Fiat may pay $1.14 billion to implement its call option on the 16% that’s left if Marchionne moves to buy in 2011 and $1.37 billion if the purchase is made in 2012. This cost is dependent on what Chrysler earns.

If you liked the article, share on:

Comments

Recommended

Following the M3’s new facelift earlier this year, BMW is once again bringing something fresh to the table. In its newest offering, a cheaper version of the high performance sedan...
by - May 26, 2017
If this design study leads to the eventual and much-awaited BMW 8 Series grand tourer, then we wouldn’t complain. After all, it looks so promising. It isn’t the final version...
by - May 26, 2017
After successfully closing a deal with Volvo in 2010, China’s Geely is now securing full ownership of Lotus -- the maker of Exige, Evora, Elise and 3-Eleven. The Chinese car...
by - May 26, 2017
Volkswagen of America has a nice surprise for potential customers of the new VW Tiguan (2018 model year). The latest iteration of the Tiguan – set to arrive in the...
by - May 25, 2017
Toyota Camry is many things but exciting isn’t one of its frequent descriptions. That’s why throughout the years, Toyota has been stepping up its game for the said model in...
by - May 25, 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