Fiat to Buy Remaining Stake in Chrysler for $4.35 Billion

Fiat SpA, which owns 58.5% of Chrysler Group LLC, has agreed to spend $4.35 billion to acquire the remaining 41.5% stake held by a United Auto Workers union healthcare trust.

The deal is expected to close by Jan. 20. Fiat will pay the trust $1.75 billion, and Chrysler will contribute $1.9 billion in the form of a special distribution. Fiat also will pay the trust an additional $700 million in four equal annual installments, the first of which will be made when the sale is finalized.

The trust gained its holding when the U.S. government bailed out Chrysler in 2009 and turned over operational control of the company to Fiat. By January 2012 Fiat had boosted its initial 20% stake in Chrysler to the current 58.5%.

Sale of the trust's equity will enable Chrysler to drop the initial public offering it was forced by the trust to file for in October. An IPO would have stalled 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.

Chrysler received $12.5 billion in government loans and equity investments during its 2009 bailout. The government wrote off $1.3 billion, and the company repaid the $11.2 billion balance in 2011.