Fiat Buys Chrysler

Chrysler Group LLC is now a subsidiary of Fiat SpA, after the Italian carmakers purchased the 41.5% of the company it didn't already own.

The $4.35 billion deal ends an acquisition process that began in 2009 when the U.S. government gave Fiat 20% ownership in Chrysler in return for promising to introduce new technologies, expand sales overseas and guide the company back to health after emerging from a government-backed bankruptcy.

Fiat increased its ownership in Chrysler to 58.5% by the beginning of 2012 January 2012 not through direct investment but by satisfying U.S. government performance requirements related to Chrysler's recovery.

The balance of the company was controlled by a United Auto Workers union healthcare trust for Chrysler retirees. 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.

Under terms of the deal, Fiat paid the trust $1.75 billion in cash. Chrysler issued a special distribution of $1.9 billion to the trust. Chrysler also agreed to pay the trust $700 million in four equal annual installments, beginning with $175 million when the deal closed earlier today.

The acquisition fulfills the goal of Fiat-Chrysler CEO Sergio Marchionne of creating a global car company big enough to compete with such rivals as General Motors and Toyota. Fully merging the two companies also gives Fiat access to Chrysler's cash, which totaled $11.5 billion at the end of September.