Fiat exercises options to increase stake in Chrysler to 65%
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TURIN, Italy (Bloomberg) -- Fiat plans to boost its stake in Chrysler Group to 65 percent by exercising its option to purchase an additional 3.3 percent from the UAW's retiree health-care fund.
Fiat calculated it has to pay $198 million for the second segment of the voluntary employees beneficiary association’s holding based on “a market multiple” applied to Chrysler earnings before interest, taxes, depreciation and amortization, according to a statement.
Fiat, which in July exercised its option to purchase a first 3.3 percent segment of the remaining VEBA holding, in September asked a U.S. court to confirm the price it has to pay to increase its controlling stake in the U.S. carmaker after failing to reach an agreement with the VEBA, which owns 41.5 percent of the company. Fiat owns the rest.
CEO Sergio Marchionne has said Fiat’s ability to complete a full merger with Chrysler is limited by a turnaround plan for Fiat announced in October. Marchionne, who leads both automakers, has said Fiat still plans to use call options that were part of Chrysler’s 2009 bankruptcy and now are in dispute.
Fiat must pay at least $342 million to boost its ownership stake to almost 62 percent, the U.S. automaker’s minority shareholder said in a court filing in November. The amount sought by VEBA is 145 percent more than the Italian carmaker said the holding should be worth.
Fiat said today it expects a determination by the court “within the next several months.”
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