Fiat to buy further stake in Chrysler
2012 Chrysler 300C executive saloon
Italian automobile company Fiat has gradually amassed a considerable stake in the US-based company Chrysler. In 2009, Fiat was the company that pulled Chrysler out of bankruptcy.
Currently, Fiat owns 58.5 per cent of Chrysler. Reportedly, the company is holding talks with the United Auto Worker Union's healthcare trust, the other stakeholder, about buying the remaining 41.5 per cent of Chrysler. This option of buying the stake from the trust can be exercised by Fiat until the end of June 2016. The stake is supposedly valued at Rs 20,000 crore, but it will be confirmed after a legal ruling.
Chrysler in the US has helped Fiat balance its weak sales in Europe. Fiat-Chrysler has been the saving grace for Fiat, which was previously very dependent on the recession-hit European markets. Fiat is also planning to put greater emphasis on the recession-resistant luxury car segment in the hopes of drawing customers away from the likes of Audi, BMW, Mercedes, etc.
Fiat's parent company Exor, headed by chairman John Elkann, sold its 15 per cent stake in Swiss industrial inspection and testing services company SGS for Rs 11,099 crore profit. Reports suggest that the move is meant to raise enough money to maintain its shareholding in the future merger.
Fiat's chief executive, Sergio Marchionne, is targeting completion of the deal by the end of summer. A Fiat share issue could also be on the cards to help with funding. However, John Elkann reiterated that Fiat's hold in the Chrysler merger would not be dampened by the share issue.
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