Fiat S.p.A. has purchased the remainder of Chrysler Group from the United Auto Workers Voluntary Employee Beneficiary Association (VEBA) trust, meaning that Fiat now owns and controls 100 percent of Chrysler. Fiat will pay a total of $3.65 billion for that 41.46-percent stake of Chrysler.
Fiat will pay the UAW for its 41.46-percent share in Chrysler in two portions. First, Chrysler Group will pay $1.9 billion to the VEBA trust. At the deal's close, Fiat will pay another $1.75 billion. Both companies say they already have "cash on hand" to make those payments.
Fiat acquired part of Chrysler in 2009, when the Italian automaker helped bail out the American company from bankruptcy. The final step to full ownership of Chrysler required Fiat to strike a deal with the UAW VEBA trust, a fund for retiree medical benefits, to purchase its share of the American automaker.
"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," Fiat chairman John Elkann said in a statement.
In addition to the $3.65 billion payment, Chrysler and the UAW signed a memorandum of understanding that will see Chrysler give $700 million, over the course of four annual installments, to the VEBA trust. The first payment will come at the close of the Fiat purchase deal, with the next three payments coming on the first three anniversaries of that date.
Previously, Fiat and the UAW were unable to agree on a purchase price for the VEBA trust stake, so the UAW forced Chrysler to file for an initial public offering. Funds from the IPO sale would have gone directly to the VEBA trust so that Fiat could purchase that remaining share of Chrysler.
"In the life of every major organization and its people, there are defining moments that go down in the history books," Fiat-Chrysler CEO Sergio Marchionne said in a statement. "For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments."
The deal is expected to be completed by January 20.