AUBURN HILLS (WWJ) – Fiat and the UAW have now closed the deal that allows the Italian automaker to own all of Chrysler.
“Chrysler Group is now a wholly owned subsidiary of Fiat,” read a statement issued by the combined company.
This move completes the $4.35 billion dollar purchase of the 41 percent stake of Chrylser that had been owned by a United Auto Workers Union trust fund. That money will now go into the fund, set up to pay for unionized retiree health care.
That deal was announced on New Years day, after a lenghty set of negotiations. This finalizes a process that began following Chrysler’s emergence from bankruptcy in 2009.
“This is certainly good news for the Chrysler group, and the entire entity,” said Jeff Schuster, an analyst with LMC Automotive. “This has been a distraction for some time. Now they can put it past them.”
Chrysler has already been producing vehicles in concert with Fiat. The Dodge Dart, Jeep Cherokee and Chrysler 200 are all based on Fiat platforms.
“No question about it, as you walk around the auto show, you see the integration of Fiat within the group’s stand,” said Schuster. “It’s seamless. It’s very clear that this is one entity, one group right now.”
Later this year we’ll see a small Jeep that will be built at a Fiat plant in Italy. The deal also gives Fiat access to Chrysler’s cash reserves. That will help the company fund its European turnaround.
We’ve also seen the return of Fiat products to the U.S. market. The next step is the return of the more upscale Alfa Romeo brand.
The next step will come January 29th, when Fiat’s board meets to go over the company’s earnings. They could decide on a new name for the combined company, and a headquarters location.
Speaking at the North American International Auto Show, CEO Sergio Marchionne said whatever decision is made on the headquarters, most work on Chrysler products will continue to be done in the U.S. and most work on Fiat products will be done in Italy.
The headquarters decision, Marchionne said, will likely be made with financial issues in mind.
“It really has to do with where we position ourselves from a capital markets standpoint. Where do we get the best reception to a market that has to provide financial resources to the financing of the group going forward.”
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