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Fiat finalises agreement to buy Chrysler in a USD 4.35 billion deal

January 02, 2014, 12:52 PM IST by Ranjan R. Bhat
Fiat finalises agreement to buy Chrysler in a USD 4.35 billion deal

Fiat has finalised an agreement to buy-out the remaining 41.46 per cent stake in Chrysler for a cool USD 4.35 billion (Rs 26,920 crore), around a year after announcing its intent to do so. The agreement was struck between Fiat and United Auto Workers union’s VEBA trust and will enable the Turin-based carmaker to pool the cash of the two companies. This will give Fiat more funds to expand its product line-up, as well as get a firm foothold in North America. The deal is expected to close on or before January 20.

In a statement, Fiat's chief executive, Sergio Marchionne said, "In the life of every major organisation and its people, there are defining moments that go down in the history books. The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how."

 According to the agreement, Chrysler and Fiat will contribute USD1.9 billion (Rs 11,750 crore) and USD 1.75 billion (Rs 10,830 crore) respectively to buy out the trust. An additional USD 700 million (Rs 4,332 crore) will be paid to UAW in four installments.

 In the aftermath of the economic crisis of 2007, Daimler-Chrysler had faced losses to the tune of USD 1.5 billion (Rs 9,282 crore). This had led to the disintegration of the German carmaker with Fiat buying a slice of Chrysler. Over the years, Fiat has been accumulating the shares of the third largest US carmaker which seemed to turn out a decent profit for the parent. Till now, the two companies were forced to manage their finances separately but now with this acquisition, Fiat hopes to get into a strong position to compete with rivals such as Volkswagen, General Motors and Ford.

 

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