Not a good thing : Fiat closes on $4.35 billion deal for full ownership of Chrysler
 

http://www.nydailynews.com/autos/fia...icle-1.1564224

Italian carmaker Fiat SpA struck a $4.35 billion deal to gain full control of Chrysler Group LLC, ending more than a year of tense talks that have obstructed Chief Executive Sergio Marchionne's efforts to combine the two automakers' resources.
The agreement, announced on Wednesday, cements Marchionne's reputation as the industry's consummate dealmaker about a decade after he took the helm of Fiat as a car business newcomer, analysts and bankers said.
But it remains to be seen whether a merger will be enough to cut Fiat's losses in Europe. Marchionne's plan to shore up Fiat depends on the ability to share technology, cash and dealer networks with Chrysler, the No. 3 U.S. automaker.
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"This is an increasingly American company now, because in Europe, and especially in Italy, the business conditions remain difficult," said Andrea Giuricin, transport analyst at Milan's Bicocca University. "Fiat has already lost many of its market positions in Europe and it won't be easy to recover that."
Fiat will acquire the 41.46 percent stake in Chrysler it did not already own from a retiree healthcare trust affiliated with the United Auto Workers union. The trust, known as a voluntary employee beneficiary association or VEBA, will receive $3.65 billion in cash for the stake, $1.9 billion of which will come from Chrysler and $1.75 billion from Fiat. After the deal closes, Chrysler has committed to giving the UAW trust another $700 million over three years.
The deal is expected to close on or before Jan 20. Fiat said that because of how the deal is structured it will not need to make any capital increase through a rights issue.
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The VEBA's payout is less rich than some analysts expected. The sale of the UAW trust's stake values the No. 3 U.S. automaker at less than $9 billion. When factoring in the additional $700 million, Chrysler is worth $10.5 billion.
"We thought they were going to have to pay a lot more than that," a London-based analyst at a major investment bank said. "The market's going to love this - Marchionne's done it again. He's brought in a deal that looks like a cracking one on the face of it and he doesn't need to do a capital increase."
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Marchionne, who has run both automakers since Chrysler's 2009 U.S. government-funded bankruptcy restructuring, aims to merge Fiat and Chrysler into the world's seventh-largest auto group.
But he has been at odds over the U.S. automaker's worth with the trust, which was pushing for a payout of more than $5 billion. In September, the trust exercised an option enshrined in bankruptcy documents to force Chrysler to file for an initial public offering.
Wednesday's deal will allow Chrysler to avoid an IPO.
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In a statement, Marchionne called the buyout a defining moment for the two companies.
"The unified ownership structure will now allow us to fully execute our vision of creating a global automaker," he said.
The Chrysler buyout talks have been closely watched by debt and equity investors as Fiat's long-term plan to cut losses in Europe depends on its ability to deepen ties with Chrysler.
Chrysler is now a profit center for Fiat, but the two companies currently are 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 lineup.
The UAW trust was created in 2007 as a way for General Motors Co, Ford Motor Co and Chrysler to offload their obligations to pay retiree healthcare benefits.
Medical benefits for GM, Ford and Chrysler retirees are handled in separate accounts and each account was initially to be funded with cash. But during the 2009 financial crisis, the VEBA agreed to accept stakes in GM and Chrysler in lieu of cash.

As long as the Challenger doesn't disappear, then Im fine.

Already halfway down the crapper. Get ready for a royal flush!

Nawwww. They'll just give it an Italian name you won't be able to pronounce. Or renamed to... Pizano Americana Fasticus. LOL

And Fiat bought Chrysler's remaining stock with Chrysler's money, Damn funny and corrupt, will never buy a new GM or Chrysler product again!!!

Gregg

We had a Chrysler dealership that was built in the 1980's, was active until a few years ago, then closed and abandoned. Yesterday, there was a crew there putting up a giant Fiat sign in front. Of course, Fiat doesn't call them dealerships, they're "studios".

I have to admit, Fiat has the best spokesmodels.

http://images.thecarconnection.com/m...00336974_m.jpg

I'm thinking that they bought Chrysler for the dealer network and the Jeep brand and they'll trash everything else eventually after they milk it to death.

Perhaps a future OP title then will be "FIAT CLOSES"...who's gonna Fix It Again then Tony?

I think they will pronounce the name Antnee :D:D

Quote:

Not a good thing : Fiat closes on $4.35 billion deal for full ownership of Chrysler

Explain why it's not a good thing?

:confused:

Looks like Capitalism at work?

:(

Oh well, at least Chrysler's product quality can't get any worse than it is now.

Fiat wouldn't be loosing Euro market share if they built a better car.....

I hope we are not beating up on Capitalism? Not perfect but the best deal around.

Gregg

I disagree with this. My wifes 2011 Durango RT has 30k miles on it now and it has been flawless. Zero build quality and reliability related issues. Long term durability is still question as only time will tell. The Durango RT has a larger more powerful engine, way better suspension and handling package, better styling, and cost $10k less than a comparable Tahoe. Very happy I chose the RT and it tows my fully loaded car hauler with easy. When this ones paid off, I'll be buying another for me. Rob

I think that the Yugo may have even gone 30K with no problems. When you get another 100K on it that will tell the difference. JMHO

I think that goes for every brand on the market today Ross. There are always lemons in the mix, no matter what it is.

That's a good point. I think that the "30K miles without problems!" indicates the lack of expectations for domestic cars. I'm on another board to help diagnose issues with my '04 Acura TL. (They start falling apart at about 120,000 miles). There are a bunch of people on there ranting and raving about suing Honda because their automatic transmission "only" lasted 120,000 miles.

Long live the Lemons! :D
http://jalopnik.com/the-best-worst-t...tve-1470216499

http://farm9.staticflickr.com/8012/7...0be87360_z.jpg

just passing ownership throughout europe, Renault, Daimler, Fiat. Fiat also owns Ferrari and Alfa Romeo

Yugo's? 30,000 miles, that's a laugh, I used to haul them, when you went to the rail yard to pick them up they would give a list of serial numbers and a bucket of keys, you had to keep on trying to find another one that would run until your trailer was full.

Then when you went to unload only half of those started!