Fiat to Boost Stake in Chrysler, Cut Investment in Europe

CEO Sergio Marchionne confirms that Fiat SpA will pay less than €200 million to buy an additional 3.3% of Chrysler Group LLC. Fiat, which currently owns 58.5% of the American company, signaled last month its intent to increase its stake in July.

Fiat will acquire the additional equity from a retiree healthcare trust, which holds a 41.5% stake in Chrysler. Fiat, which has begun merging Chrysler's operations with its own, has the option of buying a 3.3% stake from the trust every six months.

Chrysler is obliged to begin talks in early 2013 with the retiree trust about buying the entire stake. Marchionne says those negotiations will probably start late this year. He rules out "any spectacular news" about the acquisition this year, saying the estimated €3 billion cost of buying the remaining 38.2% stake is "excessive."

Marchionne tells Bloomberg that Fiat is cutting its capital spending in Europe this year by about €500 million from the €7.5 billion previously planned. He confirms the company will postpone new-model introductions because of the region's slumping demand for new vehicles.

Marchionne says the new Punto small hatchback due next year is one model that may be delayed. He adds that Fiat is in partnership talks with "several" companies that could involve sharing the Punto architecture.

Separately, Marchionne reiterates that Fiat has no plan to make an initial public offering for its Ferrari supercar unit. Earlier news reports suggested that Fiat might use a Ferrari IPO estimated to be worth as much as €4.4 billion to pay down debt, boost Fiat's share price and provide funds to complete the Chrysler acquisition.