MILAN
— Fiat has completed its buyout of Chrysler, making the U.S. business a
wholly-owned subsidiary of the Italian carmaker as it gears up to use
their combined resources to turn around its loss-making operations in
Europe.
The
company announced on January 1 that it had struck a $4.35 billion deal -
cheaper than analysts had expected - to gain full control of Chrysler,
ending more than a year of tense talks that had obstructed Chief
Executive Sergio Marchionne's efforts to create the world's
seventh-largest auto maker.
Fiat
said on Tuesday that it had completed the acquisition of the remaining
41.46 percent stake in Chrysler from a retiree healthcare trust
affiliated with the United Auto Workers (UAW) union. The trust, known as
a voluntary employee beneficiary association, or VEBA, received $3.65
billion in cash for the stake, $1.9 billion of which came from Chrysler
and $1.75 billion from Fiat.
Chrysler
has also committed to giving the UAW trust another $700 million in four
equal annual installments, the first of which was paid in connection
with the deal closure, Fiat said.
The
Chrysler buyout talks have been closely watched by debt and equity
investors because Fiat's long-term plan to cut losses in Europe depends
on its ability to deepen ties with Chrysler.
The
U.S. business is now a profit center for Fiat, but the two companies
are still forced to manage their finances separately. A full merger will
make it easier - but not automatic - to combine the cash pools of the
two companies, giving Fiat more funds to expand its product line-up.
Fiat
will discuss the merged company's future headquarters and a potential
listing outside Italy at a board meeting scheduled for January 29.
The
company is widely expected to move its headquarters outside Italy,
where Fiat was founded 115 years ago - a sensitive topic among local
unions and politicians eager to protect jobs in Fiat's home market.
Marchionne
said at the Detroit car show last week that a listing of the combined
entity was on the agenda for this year. While New York is the most
liquid market, Hong Kong is also an option, the CEO said, pledging to
stay at the helm of the merged group for at least three years.
The
first big test for the merged Fiat-Chrysler will be a three-year
industrial plan Marchionne is expected to unveil in May, in which he
will outline planned investments and models.
While
analysts have widely welcomed the Chrysler deal, which Marchionne
funded without needing a rights issue, they have been more skeptical
about the group's rising debt and 61-year-old Marchionne's ability to
cut losses in Europe.
Fiat
has said its new strategy will focus on revamping its Alfa Romeo brand
and keeping production of the sporty marque in Italy as it seeks to
utilize plants operating below capacity, protect jobs and compete in the
higher-margin premium segment of the market.
Shares in Fiat were up 1.77 percent at 7.46 euros by 1630 GMT, outperforming a 0.11 percent rise for Milan's blue-chip index.
(Reporting by Agnieszka Flak; Editing by David Goodman)
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