Fiat’s Marchionne to go up against VEBA’s Perkins over Chrysler stake

Article by Anita Panait, on August 14, 2012

Negotiations are going to be very tough between Fiat SpA chief executive Sergio Marchionne and Erickson Perkins, a close adviser to United Auto Workers President Bob King with an extensive Wall Street background. While Marchionne sits as the chief executive of Fiat unit Chrysler Group, Perkins also sits on the carmaker's board as the representative of the union's retiree health-care trust, Voluntary Employee Beneficiary Association.

These two persons will be the main protagonists in an upcoming see-saw negotiation that would entail Marchionne to seek out to acquire a 41.5% stake that Fiat does not own from current owner – UAW’s retiree health-care trust. Marchionne is hell-bent on acquiring that stake in order to take full control and access of Chrysler’s money, making him a motivated buyer.

Perkin’s trust, meanwhile, has much of its assets tied up in stock that doesn't trade on any market. And since the trust cannot pay its bills with its Chrysler shares, it has become a motivated seller. The negotiations between them are expected to center on the $6 billion Fiat is offering for VEBA’s stake in Chrysler.

Eric Selle, a JPMorgan Chase & Co. analyst, who advised Perkins during GM's bankruptcy process, provided a preview of the upcoming clash between Marchionne and Perkins. He told Bloomberg that it would be a tough negotiation, considering that Marchionne is a savvy discount buyer who owns 60% of Chrysler for bargain-basement value, and Perkins being a guy with Wall Street background that has “impetus to wind his trust's equity stake down." Perkins is known by people who have worked with him as shrewd and analytical. King called him "invaluable."

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