Fiat announced on January 1st that they made a deal to acquire full control of Chrysler for $4.35 billion. This ended more than a year of back-and-forth talks. Fiat said today that they have completed the deal to acquire the remaining 41.46% stake in the Chrysler from a retiree healthcare trust that is affiliated with the United Auto Workers (UAW).
The trust is called the voluntary employee beneficiary association (VEBA). VEBA received $3.65 billion in cash for the stake. Of that amount, $1.9 billion came from Chrysler and $1.75 billion came from Fiat. Chrysler will also give the UAW trust another $700 million in 4 equal annual installments.
Chrysler and Fiat make a powerful combined company, but they are still forced to manage finances separately. By pooling their cash together, Fiat will be able to expand their product line-up. Fiat will be discussed the merged company’s future headquarters and a listing outside of Italy during a board meeting on January 29th. Fiat will likely move their headquarters outside of Italy even though the company was founded there 115 years ago. This is a touchy subject for local unions and politicians. The IPO of the combined companies could take place in New York or Hong Kong.
Fiat will have a focus on revamping the Alfa Romeo brand and maintain production in Italy in order to protect jobs there.