Fiat has reached an agreement with the United Auto Workers to acquire the remaining 41.46% of Chrysler Group not currently held by the company. The equity position is currently held by the United Auto Workers's Voluntary Employees Beneficiary Plan (VEBA) Trust. The acquisition will be completed through Fiat's wholly owned subsidiary, Fiat North America LLC (“FNA”). The transaction is expected to close on or before January 20, 2014.
As payment for the sale of its membership interests in Chrysler Group, the VEBA Trust will receive over $3,650 million from both Chrysler and Fiat.
a special distribution payable by Chrysler Group to its members of approximately $1,900 million
and at closing, FNA will pay the remainder of approximately $1,750 million in cash to the VEBA Trust.
Fiat expects to fund the $1,750 million in cash from available cash on hand. Chrysler Group expects to fund the special distribution from available cash on hand.
The United Auto Workers (UAW) will also receive $700 million in four equal annual installments. The initial payment will be made on closing of the transaction with Fiat and additional payments will be payable on each of the next three anniversaries of the initial payment. Chrysler Group expects to fund the initial contribution to the VEBA Trust from available cash on hand.
As part of the agreement, the UAW will agree to continue to support the manufacturing operations at Chrysler Group and the further implementation of the Fiat-Chrysler alliance, including the roll-out of Fiat-Chrysler World Class Manufacturing programs.
“I have been looking forward to this day from the very moment that we were chosen to assist in the rebuilding of a vibrant Chrysler back in 2009” said John Elkann, Chairman of Fiat. “The work, commitment and achievement I have witnessed from Chrysler over the past four and a half years is nothing short of exceptional, and I take this opportunity to officially welcome each and every one of the people in the Chrysler organization to the integrated Fiat-Chrysler world.”
Sergio Marchionne, Chief Executive of Fiat and Chairman and CEO of Chrysler Group, said in a statement: “In the life of every major organization and its people, there are defining moments that go down in the history books. For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments. I will be forever grateful to the leadership team for the support and unwavering dedication shown to the integration project that today has taken its final shape. The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization that will ensure all employees a challenging and rewarding environment.”
Once the transaction is completed, Fiat and Chrysler can finally merge into a single company.
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