Traverse City Record-Eagle

Business

April 10, 2013

Fiat-Chrysler merger path to be clarified

TURIN, Italy (AP) — The CEO of Fiat, the Italian carmaker that controls Chrysler, said Tuesday he expects to have “clarity” by the end of the year on how it will achieve a full merger with the U.S. auto group.

“A merger with Chrysler is inevitable,” Sergio Marchionne said, adding that the deal could be completed — either by a straight buyout of the minority shareholder or by a public share offering — by as early as his 10th anniversary as Fiat CEO in mid-2014.

Marchionne has jointly managed the two companies since buying a 20 percent stake in 2009. Fiat has since built up its holding in the U.S. company to 58.5 percent. However, his ambitions to fully merge the two companies have been stalled by a dispute between Chrysler’s minority shareholder, the autoworkers union pension health trust, which holds the remaining 41.5 percent of shares.

The dispute centers on the value of the remaining stake in Chrysler. A court in Delaware has been asked by Fiat to put a value on a deal to buy a 3.3 percent stake in Chrysler from the trust. That ruling, which is expected in June, will form the basis for determining the value of further share deals between Fiat and the trust, amounting to a further 10 percent of the company. Once that process is complete, Fiat can then decide whether to buy the remaining minority share outright or seek an initial public offering of Chrysler to buy the pension trust out.

“I hope that by the end of the year we have more clarity on how to achieve it,” Marchionne said, adding that there it could be completed by his 10th anniversary as Fiat CEO on June 1, 2014,

“If I were to bet, I think there is a probability of more than 50 percent that it will be done by then.”

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