Fiat says it will raise Chrysler stake to 61.8% in push toward full merger
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TURIN (Bloomberg) -- Fiat will boost its stake in Chrysler Group to 61.8 percent, taking a step closer to a full merger with the U.S. carmaker.
The automaker will exercise an option in the coming weeks to buy an additional 3.3 percent from the UAW's retiree health-care trust, the company said in a statement today.
Fiat, which did not provide the purchase price in the statement, will pay less than 200 million euros ($252 million) for the added holding, CEO Sergio Marchionne said in an interview last month.
Marchionne plans to combine the two manufacturers to boost collective sales to more than 100 billion euros by 2014. He is relying on Chrysler's profit as Fiat struggles to end losses in Europe. Without Chrysler, the Italian automaker would have posted a first-quarter net loss.
Fiat is not currently in talks with the union's retiree health-care trust, VEBA, to buy the remaining 38.2 percent held by the trust, Marchionne said in the interview. "It's in VEBA's interest to negotiate with us," Marchionne added.
Fiat has the right to buy the entire stake for $4.25 billion, plus 9 percent annual interest calculated from January 2010.
The union's retiree health-care trust last month appointed a new director to represent its interests as Marchionne pursues the full combination. Erickson Perkins, an adviser to UAW president Bob King, became a director effective June 10. The 57- year-old has served in King's office since July 2010 as director of the union's strategic research department.
Cutting Europe investments
Fiat has delayed the introduction of new models in Europe, and is cutting investment in the region by 500 million euros this year because Marchionne, 60, doesn't expect any recovery in the second half.
Fiat's first-quarter operating losses in the region almost doubled to 207 million euros.
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