Marchionne reaffirms Fiat’s interest in acquiring all of Chrysler

Article by Anita Panait, on April 9, 2012

Fiat CEO Sergio Marchionne confirmed that the Italian carmaker is still bent in increasing its ownership in Chrysler Group from 58.5% to 100%. According to Marchionne, who also serves as Chrysler’s chief executive, Fiat is ''technically ready'' to commence acquiring the shares in the US carmaker that it does not own yet.

The remaining 41.5 percent stake in Chrysler is currently held by Voluntary Employee Beneficiary Association (VEBA), a trust for U.S. autoworkers. Marchionne, who was speaking on the sidelines of Fiat's annual general meeting, said that Fiat could choose between two options to purchase the VEBA stake.

The first option would allow Fiat to acquire up to 16.6 percent of Chrysler between July 2012 and June 2016, by purchasing no more than 3.32 percent of total shares every six months. According to the estimates of financial analysts, Fiat would pay slightly under $200 million for the single purchase of the 3.32 percent stake, based on Chrysler and Fiat's results from the last four rolling quarters. 

The second option, dubbed the Equity Recapture Agreement, allows Fiat to acquire VEBA’s 41.5 stake for $4.25 billion, plus 9% compounded interest accrued annually from Jan. 1, 2010. 

The money previously received by VEBA will be deducted from the figure stated. Marchionne explained that it is highly unlikely the two companies will merge this year. Meanwhile, Marchionne revealed that Fiat has no plans to spin-off the luxury Ferrari and Maserati units, adding that he wants them inside the group.

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