Fiat SpA will acquire the U.S. government’s remaining stake in Chrysler Group LLC for $500 million,
Bloomberg reported.
Fiat will pay an additional $60 million to the U.S. Treasury as part of a deal to acquire the government’s rights to buy a union trust fund’s stake in Chrysler. Fifteen million dollars from the latter transaction will go to the Canadian government, the report said.
With the new option to buy all of the Chrysler shares held by the United Auto Workers’ retiree health-care trust, [Fiat] Chief Executive Officer Sergio Marchionne may not need to hold an initial public offering.
Before the announcement, Fiat had increased its holding in Chrysler to 46% after Chrysler repaid $7.6 billion in U.S. and Canadian government loans, the Bloomberg report said.
Citing an industry observer, the article said, “The quick purchase of a majority stake in Chrysler shows how fast Marchionne has taken the … carmaker from deep losses to a position where it could break even and succeed….”
Fiat said in a filing that it has rights to raise its stake beyond 70%, the report noted. A Chrysler IPO is still possible, or Fiat may allow the union trust to sell its stake to an outsider, the report noted. (Source: Bloomberg, June 3, 2011.)
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