Fiat Spa has reached an agreement with Chrysler Group LLC's minority shareholder, the United Auto Workers’ health trust, in order to secure the remainder of the group.The agreement was reached at $3.65 billion; encompassing a special distribution payment from Chrysler of roughly $1.9 billion, and a direct payment from Fiat to the trust of $1.75 billion. Both Fiat and Chrysler will fund the deal from available cash in hand. The deal is likely to speed up the merger of the Italian and American company, and is expected to close on or before January 20.
In addition, for the union to relinquish its ownership, the U.S. automaker will make an extra payment of $700 million annually in four installments.
The deal puts an end to a dispute between Fiat and the trust over the price of Chrysler shares. Sergio Marchionne, CEO of Fiat and Chrysler, has wanted Fiat to own Chrysler completely for quite some time -- especially to stop the firm from issuing an IPO -- but the price caused a year-long problem. In a statement Wednesday, he said:
"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."
Fiat and the trust have shared ownership of Chrysler since the company emerged from bankruptcy in 2009. The deal will bolster Fiat's position as one of the world's largest automakers. According to vehicle manufacturer organization OICA, Fiat and Chrysler sold 4.5 million vehicles collectively worldwide in 2012.
Image credit: Chrysler