US – The Italian vehicle-maker’s North American subsidiary (FNA) will acquire the 41.4616% of Chrysler which it does not already own, after agreeing a deal with the VEBA Trust. The latter will receive aggregate consideration of $3.65 billion.
This will consist of: a special distribution payable by Chrysler to its members of around $1.9 billion in aggregrate, with FNA’s portion to be paid by FNA to the VEBA Trust as part of the purchase consideration; and, at closing, FNA will pay the remaining $1.75 billion in cash purchase consideration to the VEBA Trust. Both Fiat and Chrysler expect to fund the payments using cash on hand.
Under Chrysler’s existing collective bargaining deal, Chrysler and UAW have agreed to provide for additional contributions by Chrysler to the VEBA Trust of an aggregate $700m in four equal, annual installments. UAW will continue to support industrial operations at Chrysler and the further implementation of the Fiat-Chrysler alliance.
Sergio Marchionne, CEO of Fiat and chairman and CEO of Chrysler, commented: “In the life of every major organisation and its people, there are defining moments that go down in the history books. For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments.”
The transaction is expected to close on or before January 20, 2014.