Fiat has increased its stake in Chrysler Group by 3.3 percent, bringing the Italian company’s total share in the American automaker to 68.5 percent. The increase was made possible by Fiat using its third call option to purchase a 3.3-percent slice of VEBA, a retirement fund for UAW employees.
As part of Fiat’s rescue of Chrysler, the Italian company is allowed to purchase up to 20 percent of the VEBA share in Chrysler every six months from 2012 through 2016, although the total purchase amount can’t exceed 40 percent. VEBA, or the Voluntary Employee Beneficiary Association, pays healthcare benefits to retired United Auto Workers employees. Fiat estimates the newest 3.3-percent purchase will cost it $254.7 million.
Fiat previously purchase 3.3-percent slices of VEBA, which increased its stake in Chrysler, on July 3, 2012 and January 3, 2013. The Italian automaker now owns 68.49 percent of the shares in Chrysler Group. According to Automotive News, the move to purchase a larger chunk of Chrysler is part of Fiat CEO Sergio Marchionne’s bid to take complete control of the American automaker. That would give Fiat access to Chrysler’s capital and would help the Italians curb heavy losses in Europe. Last year, Fiat reportedly lost $903 million in Europe, even as Chrysler Group posted $1.7 billion in net income.
Fiat proposed a price to purchase all of the VEBA equity in Chrysler in September 2012, which could reportedly push Fiat’s ownership of the company to 70 percent, but the case is still in court in Delaware. AN says that Fiat values the VEBA shares at $4.2 billion while VEBA itself values them at $10.3 billion.
Sources: Fiat, Automotive News