Marchionne aims to complete the purchase by the end of the summer, pending the results of a legal case between Fiat and the health-care trust over the value of its Chrysler stake, the people said. Fiat has received verbal agreements at this point from some of the banks, while no final deal has been signed, the people said.
Marchionne plans to combine the two manufacturers to forge a global automaking group to challenge General Motors Co. and Volkswagen AG. Fiat must first buy the rest of Chrysler after accumulating a 58.5 percent stake since taking control of the U.S. company in 2009 as it emerged from bankruptcy.
The money raised would be used to buy the remaining Chrysler shares and refinance debt of both automakers at lower interest rates, the people said. Marchionne will be able to combine their balance sheets if he chooses to do so, one of the people said.
Representatives for Goldman Sachs, Bank of America and Fiat declined to comment. A BNP Paribas spokeswoman said she couldn't immediately comment, while a Deutsche Bank spokeswoman couldn't immediately be reached for comment.
Fiat is planning a two-step deal, with the Italian carmaker first planning to buy the remaining Chrysler stake, and later refinancing its debt in a planned merger with its American unit, one person said.
Italy's biggest manufacturer may pay as much as $3.5 billion for the rest of Chrysler, UBS estimates. The two together had 7.1 billion euros of net industrial debt at the end of March.
One option being explored is to create a new company in the U.S., merge Fiat and Chrysler into it and issue shares in the combined entity, one of the people said. Current Fiat owners would exchange their shares for a stake in the new company, the person said. The Agnelli family, which controls Fiat, would end up with a minority stake, the person said.
Fiat and the health-care trust are in court disputing the price for a portion of the shares Fiat is seeking to buy by exercising options it has. The Italian carmaker may end up paying more than it is currently offering, the Delaware judge overseeing the case suggested last month.
The judge has until late July to make a ruling in the case, according the court's guidelines, which stipulate a decision should come within 90 days of oral arguments.
Marchionne is considering moving Fiat's headquarters to the U.S. from Italy after the merger as the main revenue and profit sources shift to North America, three people familiar with the matter said earlier this month.
No final decision on the headquarters has been made and other options are being examined, the people said. Fiat said the headquarters issue is not on its agenda at the moment. The CEO said last month that he favored a primary listing in New York for the company.