Fiat Reaches Deal to Buy Remaining Stake in Chrysler

Fiat SpA has agreed to spend $4.35 billion (€3.16 billion) to acquire the 41.5% of Chrysler Group LLC it doesn't already own.

The deal, which is expected to close by Jan. 20, is with a United Auto Workers union healthcare trust. The trust gained its stake when the U.S. government bailed out Chrysler in 2009 and turned over operational control of the company to Fiat. Since then Fiat has increased its initial equity in the company from 20% to 58.5%.

Under terms of the deal, Fiat will pay the trust $1.75 billion (€1.27 billion), and Chrysler will contribute a $1.9 billion (€1.4 billion) as a special distribution. Fiat has agreed to pay the trust an additional $700 million (€509 million) in four equal annual installments, the first of which will be made when the sale closes.

The equity sale allows Chrysler to drop the initial public offering it was forced by the trust to file for in October. An IPO would have thwarted Fiat-Chrysler CEO Sergio Marchionne's plan to quickly combine the two companies.

Chrysler's profits have offset Fiat's losses over the past two years. A full merger will give the Italian company access to Chrysler's cash, which totaled $11.5 billion at the end of September.