This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Deal: Fiat Eyes Labor Peace in $4.4 billion Chrysler Deal

NEW YORK ( TheStreet) -- Italy's Fiat SpA on Wednesday, Jan. 2, kicked off the new year with a long-awaited, $4.35 billion agreement to end a dispute with labor representatives at Chrysler Group LLC and buy the outstanding shares from a union-affiliated healthcare trust.

Fiat, of Turin, Italy, said it would pay $3.65 billion for the 41.5% stake it doesn't already own. The price includes $1.75 billion from its own coffers as well as $1.9 billion from Chrysler itself.

Fiat will also pay a healthcare trust affiliated to the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, or UAW, union an additional $700 million to support Fiat CEO Sergio Marchionne's efforts to integrate Chrysler and drop lawsuits related to Fiat's attempts to buy the outstanding holding. 

The agreement ignited Fiat's shares on their first day of 2014 trading. The stock was up 12.2%, or 0.725, at 6.675 ($9.16) by late morning in Milan.

"The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization that will ensure all employees a challenging and rewarding environment," Marchionne said in a statement.

Fiat began its foray into Detroit by buying 20% of Chrysler as it emerged from bankruptcy in 2009. It gained control in 2011 and then began a lengthy process to buy the outstanding holding from the UAW's Voluntary Employee Beneficiary Association, known as Veba. Those efforts included call options on a 3.3% stake held by Veba. The call options led to a series of lawsuits that have been settled in the New Year's deal.

Marchionne, who was also the architect of the original Chrysler deal, is credited with saving Fiat by reshaping and modernizing the Italian carmaker. He spun out the company's commercial vehicle and agricultural machinery division, now known as Fiat Industrial SpA and he relaunched the company's popular 500 city car.

The popular executive then began looking abroad where Chrysler was emerging from a nightmare marriage with Germany's Daimler AG. In keeping with an auto manufacturing trend, Marchionne wants to create a global automaker to take on the likes of Toyota Motor Corp. and General Motors Co.

The deal is expected to close Jan. 20 and Fiat said neither it nor Chrysler will need to turn to external sources for financing.

In the past, a Willkie Farr & Gallagher LLP team including Robert Stebbins, Michael Brandt and Delano Ladd have provided legal counsel to Fiat.

-- Andrew Bulkeley in Berlin.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
F $16.16 1.10%
GM $37.74 1.20%
AAPL $126.07 2.30%
FB $82.96 -0.41%
GOOG $550.04 0.31%

Markets

DOW 17,919.46 -56.85 -0.32%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs