A Fiat 500 car under covers is seen at a dealership in Rome. Fiat SpA has told the minority shareholder in Chrysler Group LLC of its intention to buy another 3.3-per-cent stake in the smallest U.S. auto maker.ALESSANDRO BIANCHI/Reuters
Fiat SpA has told the minority shareholder in Chrysler Group LLC of its intention to buy another 3.3-per-cent stake in the smallest U.S. auto maker for $198-million (U.S.), the Italian auto maker said on Thursday.
The announcement is another step to fulfill chief executive Sergio Marchionne's aim for Fiat to own all of Chrysler by buying the 41.5-per-cent stake now owned by the retiree health-care trust fund affiliated with the United Auto Workers union.
The two investors have been wrangling over Chrysler's value since last year, when the UAW trust fund rebuffed Fiat's attempts to buy a 3.3-per-cent stake in Chrysler for $139.7-million, saying the price was too low.
Fiat, which owns 58.5 per cent of Chrysler, then sued the UAW trust fund, and the two parties are attempting to resolve the dispute in a Delaware court.
A determination by the court "is currently expected within the next several months," Fiat said in a statement. If this sale and the transaction announced Thursday go through, Fiat will own 65.17 per cent of Chrysler.
The UAW trust, known as a VEBA, or voluntary employees beneficiary association, took the stake in Chrysler during the car maker's U.S.-government-led restructuring in 2009.
The entity, which manages medical benefits for 824,000 blue-collar retirees, is seeking to maximize the holding's value to cover escalating health-care costs for Chrysler's retirees.
Fiat holds options to buy up to 40 per cent of Chrysler owned by the UAW trust that can be exercised until the end of June 2016.
The price will be based on a multiple – not exceeding Fiat's multiples – of Chrysler's core earnings in the past four quarters, less net industrial debt, Fiat said on Thursday.
A spokesman and an attorney for the VEBA did not have an immediate comment on Fiat's announcement.