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

Article by Christian Andrei, 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

Login or Create new account to add a comment!

Recommended

Did you miss the opportunity to get a brand new Dodge Viper? Well, here’s something you don’t want to miss. Dodge has announced a “final call” for orders for its...
by - December 6, 2016
Acura fans and customers rejoice! Sales have begun for the flagship model of Acura’s RLX top-of-the-range sedan – the 2017 Acura RLX Sport Hybrid. Described by Acura as its most...
by - December 6, 2016
Autonomous cars are slowly but surely gaining more appeal among drivers around the world. While a complete self-driving system has yet to be launched, carmakers have been finding ways to...
by - December 6, 2016
BMW has officially ended the production cycle for what is considered as its meanest and fastest sports car – the BMW M4 GTS. Basically a power-up evolution of the BMW...
by - December 6, 2016
Now that Lamborghini is set to bring a “more aggressive” Aventador, it only makes sense that it will be given a name. Seeing how it goes, perhaps we won’t be...
by - December 6, 2016
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