Chrysler will soon fully belong to Italian automaker Fiat SpA.
On Wednesday, Fiat announced that it had struck a deal to acquire the last 41.5 percent stake of Chrysler Group LLC for $3.6 billion.
The shares are owned by the VEBA Trust, which is run by the United Auto Workers.
You may remember Fiat got control of Chrysler during the 2009 Chapter 11 bankruptcy reorganization.
The deal helped save Chrysler. In fact, the company has thrived and it's something Fiat leadership wanted from day one. Now, an investment may be made in the Euro brands, but don't expect Chrysler to go anywhere.
"In the life of every major organization and its people, there are defining moments that go down in the history books," said Stephanie Brinley. "For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments."
What this mean for current Chrysler employees likely in the short term is very little. This deal isn't taking anyone by surprise.
The deal is expected to be official by Jan. 20.
As part of the deal, Chrysler will pay the trust $700 million in four annual installments.
Statement from Fiat:
Fiat S.p.A. (“Fiat”) today announced an agreement with the VEBA Trust, under which its wholly owned subsidiary, Fiat North America LLC (“FNA”), will acquire all of the VEBA Trust's equity membership interests in Chrysler Group LLC (“ Chrysler Group”), representing the 41.4616% of Chrysler Group not currently held by FNA. The transaction is expected to close on or before January 20, 2014.
In consideration for the sale of its membership interests in Chrysler Group, the VEBA Trust will receive aggregate consideration of U.S. $3,650 million consisting of:
A special distribution payable by Chrysler Group to its members, in an aggregate amount of approximately U.S.$1,900 million (FNA’s portion of the special distribution will be paid by FNA to the VEBA Trust as part of the purchase consideration) and at closing, FNA will pay the remainder of approximately U.S.$1,750 million in cash purchase consideration to the VEBA Trust.
Fiat expects to fund the U.S.$1,750 million in cash from available cash on hand. Chrysler Group expects to fund the special distribution from available cash on hand. Contemporaneously with the transactions described above, Chrysler Group and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the “UAW”) have agreed to a memorandum of understanding under Chrysler Group’s existing collective bargaining agreements to provide for additional contributions by Chrysler Group to the VEBA Trust of an aggregate of U.S.$700 million in four equal annual installments.
The initial payment will be made on closing of the transaction with Fiat and additional payments will be payable on each of the next three anniversaries of the initial payment. Chrysler Group expects to fund the initial contribution to the VEBA Trust from available cash on hand.
In consideration for these contributions, the UAW will agree to certain commitments to continue to support the industrial operations at Chrysler Group and the further implementation of the Fiat Chrysler alliance, including to use best efforts to cooperate in the continued roll-out of Fiat-Chrysler World Class Manufacturing programs, actively participate in benchmarking efforts associated with implementation of these programs across all of Fiat-Chrysler manufacturing sites to ensure objective performance assessments and provide for proper application of WCM principles, and actively assist in the achievement of the Group’s long-term business plan.