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.

If you liked the article, share on:

Topics: fiat, chrysler

Comments

Recommended

Dubai is one of the few countries where expensive cars are the norm, many of which are specially modified as well. And this just in: Bentley has debuted the new...
by - November 21, 2017
The 2018 Jaguar XEL with its stretched-out wheelbase and longer doors is the newest addition to the growing list of premium sedans in China---joining the ranks of Mercedes-Benz C-Class L,...
by - November 21, 2017
Honda this week announced that its all-new 2018 Clarity Plug-in Hybrid will arrive at US dealerships with a starting price of $33,400 beginning on the first of December. Because the...
by - November 21, 2017
Lamborghini had been expected to refresh its entry-level model – the Lamborghini Huracan – in late 2018 or early 2019. But here is some good news for fans of the...
by - November 20, 2017
The Chevrolet Corvette will be turning 65 years old in 2018, and as part of the celebrations, the brand is introducing a special edition C7 – the Chevrolet Corvette Carbon...
by - November 19, 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