Fiat Acquires 100% of Chrysler

As expected, Fiat SpA has completed its purchase of Chrysler Group LLC in a $4.35 billion (€3.2 billion) deal capping a process that began five years ago.

Earlier today Fiat and Chrysler paid a union healthcare trust $1.75 billion (€1.3 billion) and $1.9 billion (€1.4 billion) respectively to acquire the 41.5% of the company it didn't already own. Both payments were made with cash on hand.

Chrysler also has agreed to pay the trust an additional $525 million (€387 million) in three annual installments over the next three years.

The acquisition makes Chrysler a wholly owned unit of Fiat and fulfills CEO Sergio Marchionne's goal of creating a global car company big enough to compete with such rivals as General Motors and Toyota. Last year Chrysler and Fiat sold a combined 4.2 million vehicles worldwide compared with 9.7 million for GM and an estimated 9.9 million for Toyota.

Chrysler profits have offset Fiat losses over the past two years. Fully merging the two companies will give the Italian company access to Chrysler's cash, which totaled $11.5 billion (€8.5 billion) at the end of September.

Fiat acquired a 20% stake in Chrysler when the American company emerged from a government-backed bankruptcy in 2009. By January 2012 it had expanded its holding to 58.5%, not through direct investment but by satisfying U.S. government performance requirements related to Chrysler's recovery.

But Fiat's efforts to buy the trust's remaining stake in 3.3% increments stalled over the value of the trust's holding. The dispute prompted a lawsuit and forced Chrysler to register for an initial public offering. Both of those steps were cancelled by today's sale.