Italian automaker Fiat S.p.A. signaled last week that it intends to quickly procure a majority stake in Chrysler Group, the Auburn Hills, Mich.-based U.S. automaker.
After boosting its stake in Chrysler to 46 percent last week, Sergio Marchionne, the head of both Fiat and Chrysler, said that it intends to purchase the remaining 6 percent stake in the company from the U.S. federal government, as well as possibly buy the 1.7 percent of the company currently owned by the Canadian government.
Fiat said late last Friday that it intended to exercise its option to purchase the 6 percent currently held by the U.S. Treasury, which was contingent upon Chrysler fully paying off its debt to the U.S. and Canadian governments. Last week, Chrysler fully repaid those loans, which were put in place after the company’s bailout in 2009.
“Paying back the loans, along with the financial community’s investment in our refinancing packages, marks another step in the company returning as a competitive force in the global automotive industry,” Marchionne said in a statement released by Chrysler.
With the additional 6 percent, Fiat would become 52 percent—a majority—owner of the company and have operational and strategic control. Fiat reportedly is also interested in buying out the 1.7 percent owned by the Canadian and Ontario governments.
If successful, Chrysler would return to foreign ownership only four years after separating itself from Germany’s Daimler AG.
Fiat could get another 5 percent stake in the company if it can develop and sell a vehicle that gets a combined city/highway fuel economy of 40 miles per gallon. This was a stipulation in its 2009 agreement with shareholders.
By contrast, the U.S. government still owns more than 25 percent of General Motors.
Chrysler reported a profit of $116 million for the first quarter of 2011, its first quarterly gain since 2006. Fiat originally obtained a 20 percent stake in 2009, after Chrysler emerged from prepackaged bankruptcy. Fiat was seen as an ideal partner for the firm, as Chrysler at the time lacked expertise in small vehicles, while Fiat lacked a presence in North America after exiting the market in the early 1990s.
After boosting its stake in Chrysler to 46 percent last week, Sergio Marchionne, the head of both Fiat and Chrysler, said that it intends to purchase the remaining 6 percent stake in the company from the U.S. federal government, as well as possibly buy the 1.7 percent of the company currently owned by the Canadian government.
Fiat said late last Friday that it intended to exercise its option to purchase the 6 percent currently held by the U.S. Treasury, which was contingent upon Chrysler fully paying off its debt to the U.S. and Canadian governments. Last week, Chrysler fully repaid those loans, which were put in place after the company’s bailout in 2009.
“Paying back the loans, along with the financial community’s investment in our refinancing packages, marks another step in the company returning as a competitive force in the global automotive industry,” Marchionne said in a statement released by Chrysler.
With the additional 6 percent, Fiat would become 52 percent—a majority—owner of the company and have operational and strategic control. Fiat reportedly is also interested in buying out the 1.7 percent owned by the Canadian and Ontario governments.
If successful, Chrysler would return to foreign ownership only four years after separating itself from Germany’s Daimler AG.
Fiat could get another 5 percent stake in the company if it can develop and sell a vehicle that gets a combined city/highway fuel economy of 40 miles per gallon. This was a stipulation in its 2009 agreement with shareholders.
By contrast, the U.S. government still owns more than 25 percent of General Motors.
Chrysler reported a profit of $116 million for the first quarter of 2011, its first quarterly gain since 2006. Fiat originally obtained a 20 percent stake in 2009, after Chrysler emerged from prepackaged bankruptcy. Fiat was seen as an ideal partner for the firm, as Chrysler at the time lacked expertise in small vehicles, while Fiat lacked a presence in North America after exiting the market in the early 1990s.
