Fiat reaches US$4.35 billion deal to fully take over Chrysler

Italian carmaker Fiat struck a US$4.35 billion deal to gain full control of Chrysler, ending more than a year of tense talks that have obstructed chief executive Sergio Marchionne’s efforts to combine the two carmakers’ resources.

The agreement, announced on Wednesday, cements Marchionne’s reputation as the industry’s consummate dealmaker about a decade after he took the helm of Fiat as a newcomer to the car business, analysts and bankers said.

But it remains to be seen whether a merger will be enough to cut Fiat’s losses in Europe.

Marchionne’s plan to shore up Fiat depends on the ability to share technology, cash and dealer networks with Chrysler, the No 3 US carmaker.

“This is an increasingly American company now, because in Europe, and especially in Italy, the business conditions remain difficult,” said Andrea Giuricin, transport analyst at Milan’s Bicocca University. “Fiat has already lost many of its market positions in Europe, and it won’t be easy to recover that.”

Fiat will acquire the 41.46 per cent stake in Chrysler it did not already own from a retiree healthcare trust affiliated with the United Auto Workers union. The trust, known as a voluntary employee beneficiary association or veba, will receive US$3.65 billion in cash for the stake, US$1.9 billion of which will come from Chrysler and US$1.75 billion from Fiat.