Fiat's Marchionne Says Company Has Enough Money to Buy Chrysler Outright
Fiat and Chrysler CEO Sergio Marchionne has bullishly pushed for Fiat to take over the remaining stake it doesn't yet have in the Chrysler Corporation. Now he says Fiat has the money to do so. At a shareholders meeting in Turin for Fiat, Marchionne said that there was no need to issue additional shares of stock in Fiat to purchase the remainder of Chrysler, according to the Detroit News. The only problem left is figuring out how much to pay for it. Fiat owns 58.5 percent of Chrysler, most of which it purchased following the Detroit automaker's 2009 bankruptcy. Since then, the company has raged back to profitability, and new products have given Chrysler a very competitive lineup, from its eight-speed Ram 1500 pickup to its new diesel Jeep Grand Cherokee. As part of the 2009 agreement, the UAW's VEBA trust fund would receive ownership of the rest of Chrysler, 41.5 percent. Fiat and the UAW have not been able to come to an agreement over the valuation of the company's stock, leading to what is assumed will be a decision by the end of June in a Delaware federal court. Marchionne is looking to refinance a 1.95 billion euro ($2.55 billion) line of credit for Fiat, which it may use to buy the remainder of Chrysler instead of selling off any assets like part of Chrysler's Mopar parts division. If you're wondering why the Fiat is looking so intently at buying the rest of Chrysler, you're not alone. Here are the answers: a single company would be able to move faster, there would be less of a need for UAW-led decisions in the boardroom, and right now Chrysler is the buoy for Fiat as profits are down across Europe. Chrysler's products are surging in the U.S. and to a lesser degree in China, the world's two largest car markets. As the companies become further intertwined, it makes sense for them to operate as a single unit. It also makes sense for them to tie the knot before the economy worsens further in Europe and creditors dry up their financing for a potential Fiat-Chrysler merger. This time, unlike Chrysler's former merger with Mercedes-Benz, it looks like resources will be divided among both companies fairly equally. Source: Detroit News
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