Chrysler will now become a wholly owned member of the Fiat family, as it's been announced that the 41.46-percent stake in the Auburn Hills, MI-based manufacturer owned by the United Auto Workers' VEBA trust fund will be sold to the Italian company. Concluding the agreement will mark the closure of a piecemeal purchase process that could have resulted in an initial public offering.

The total cost of the sale will see the VEBA healthcare trust receive $4.35 billion, $3.65 billion of which will come from Fiat. $1.75 billion of that will be cash, while an additional $1.9 billion will be part of a "special distribution." An additional $700 million will be paid over four separate installments according to reports from Automotive News Europe and USA Today, although the shares will belong to Fiat following the first payment. The deal was reportedly initially struck on Sunday (though it is just being announced today), and is being portrayed as particularly good news for Fiat and Chrysler, which have now prevented the remaining shares going to the stock market in a UAW-forced IPO.

"The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organization that will ensure all employees a challenging and rewarding environment," Fiat CEO Sergio Marchionne said in a statement.

As part of the agreement, the UAW will adopt the "best practices" of Fiat factories from across the globe in its own plants, although it hasn't been explicitly stated what these are and how they will come about.

Overall, this move comes as something of a surprise, as all indications pointed to a Chrysler IPO at some point in January. As recently as December 23, the two parties were reported back at the bargaining table, though, where this finalized deal was likely hammered out. There's a short press release from Chrysler available below if you want to read the rest of the corporate-speak skinny.
Show full PR text
Chrysler Group Announces Agreement With UAW Calling for Contributions to VEBA Trust and Also Announces a Special Distribution

January 1, 2014 , Auburn Hills, Mich. - Chrysler Group and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the "UAW") have agreed to a memorandum of understanding to supplement Chrysler Group's existing collective bargaining agreement. Under the MoU, Chrysler Group will provide additional contributions to the VEBA Trust of an aggregate of $700 million in four equal annual installments. The initial payment will be made on closing of a transaction in which the VEBA Trust will sell to Fiat North America, one of Fiat's wholly owned subsidiaries, all of the VEBA Trust's equity interest in Chrysler. Additional payments of $175 million will be payable on each of the next three anniversaries of the initial payment. Chrysler Group expects to fund the initial contribution to the VEBA Trust from available cash on hand.

In consideration for these contributions, the UAW will agree to certain commitments to continue to support the industrial operations at Chrysler Group and the further implementation of the Fiat-Chrysler alliance, including to use best efforts to cooperate in the continued roll-out of Fiat-Chrysler World Class Manufacturing programs, actively participate in benchmarking efforts associated with implementation of these programs across all of Fiat-Chrysler manufacturing sites to ensure objective performance assessments and provide for proper application of WCM principles and actively assist in the achievement of the Group's long-term business plan.

The Chrysler Group Board of Directors has also determined to support the declaration and payment by Chrysler Group of a special distribution in an aggregate amount of approximately $1,900 million,1 subject to the Board completing its diligence and receiving independent assurance regarding the distribution payment capacity of Chrysler Group, a process that management expects will be completed on or before January 20, 2014
Fiat to acquire remaining equity interests in Chrysler Group LLC from VEBA Trust.


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  • 140 Comments
      James
      • 11 Months Ago
      Next, Fiat should close most of the factories. Keep the Wrangler and Grand Cherokee and perhaps the Ram. Shut down the rest which are just complete Detroit ccrap.
      Jesus!
      • 11 Months Ago
      Here we go again. Bailout. Merger. Sold. Bailout. Merger. Whos buying next? Lol. Geez. You know Daimler owning Chrysler at least gave us a smooth riding and great handling Grand Cherokee, but all Fiat has brought is a crappy and slow 500 with pathetic dealer service, a 90's Neon renamed Dart, and the midsize nasty queen, the Cherokee. I think I will head over to GM for my next purchase.
        billfrombuckhead
        • 11 Months Ago
        @Jesus!
        Jesus! One of the dumber trolls taking the lord's name in vain.
          Jesus!
          • 11 Months Ago
          @billfrombuckhead
          Oh Bill. I own a Chrysler product. I imagine anyone with an opinion than yours sends them to automatic troll status? And seriously, is that all you have? You know I am right. The 500 is junk. I personally know as one of my friends owned one and just finally said good riddance and bought a Focus. On to the Dart. Ho hum interior, slow and weak engines, and outdated looks. I wont even go into the Cherokee. If you don't agree with me because you are a Chrysler guy, fine. But unless you have an intellegent or even grown up response to my thoughts, your post is irrelevant and as you would call it, "trolling".
          QCRamAir
          • 11 Months Ago
          @billfrombuckhead
          @ Jesus! I like how your comment already had a "+1" even though it said it was only posted one minute ago. That = troll.
      Robbie
      • 11 Months Ago
      Both of these companies have weak products that are mostly afterthoughts in their respective segments. The only interesting thing that could come out of this is the potential for Alfa Romeo to (finally) return to the states. The company as a whole has dubious prospects though. Anyone remember DaimlerChrysler?
        Uhwhat?
        • 11 Months Ago
        @Robbie
        You have no idea what you are talking about. The Grand Cherokee is easily one of the nicest SUVs in its segment. That vehicle has performance numbers that almost no other vehicle for its price can claim. Where is the after thought in that?
          Jesus!
          • 11 Months Ago
          @Uhwhat?
          To be fair he did say mostly and he is correct.
      Mike Lee
      • 11 Months Ago
      Well...that's it for me(!). I'll never buy a "Chrysler (Fiat)" again.
      Technoir
      • 11 Months Ago
      I'm ok with it. No American company made an offer for Chrysler, and Chrysler can benefit greatly from Fiat's technology. It is now a global company in a global economy in a world becoming a type 1 civilization.
      Justin Shaw
      • 11 Months Ago
      Tata bought Land Rover and Jaguar. Those two brands are doing better than ever. I hope the same happens with Fiat/Chrysler
        ChaosphereIX
        • 11 Months Ago
        @Justin Shaw
        and Geely and Volvo - and it is coming back from the brink...
          Jesus!
          • 11 Months Ago
          @ChaosphereIX
          Volvo sells less than Lincoln...
        Jesus!
        • 11 Months Ago
        @Justin Shaw
        And who do you think kept them alive? You think Tata just all of a sudden came up with the new products once purchased? No. Ford financed a lot and if not for them would prob be gone(Jaguar more likely than LR).
          RampantFury
          • 11 Months Ago
          @Jesus!
          HAH Are you on crack? Volvo sell's plenty of cars in Europe. How can you say they sell less then Lincoln?
          whofan
          • 11 Months Ago
          @Jesus!
          Ford dumped over 10 billion into Jaguar over the years that they owned them. Jaguar was a money pit for Ford. Some of the fruit of their investment was finally coming to life as Ford sold Jaguar. Ford was a mess so they had to dump their other brands as well.
      Andrew TheBoss
      • 11 Months Ago
      Sorry for my English. As Italian i'm proud Fiat is partner of this American Company. Partner, not owner. We don't feel this company as "owner",but as partner independent and collaborative. The differences between Italians and Germans is that. Probably (Germans) they never believed about this. This is in their nature, heritage. I don't feel Chrysler as an Sub company. The thing that happens with Mercedes. The idea is to merge, to join, all our technologies, Italian and Americans to have better design (honestly, for me, Chrysler lack design of cars) to increase quality and efficiency. Chrysler is considered the American Fiat. Mediocre products and low quality. Is time to change this point of view! The products are complementary. Chrysler need our engines and chassis while we need Chrysler for 4x4, muscle cars, Jeep and so on. The Grand Cherokee now is available with a super Turbodiesel 3.0 with a 8shift transmission (Built in Cento, Ferrara). The New Cherokee have a Giulietta Chassis. Probably is not the best as design but surely is efficient and light. And, ok, Chrysler dealers are a screwdriver for our Italian products. Ready for use. Unfortunately we are suffering a huge crisis and the last 20 years were terrible for FIat reliability, but we are growing fast and recovering the gaps. Now a Giulietta is, honestly, better than many japanese, germans or Koreans. Ah, i'm looking for my next car, a 190CV Grand Cherokee Turbodiesel as replacement for my old Volvo V70... Bye
        Bexarpaw
        • 11 Months Ago
        @Andrew TheBoss
        As a long time former Chrysler employee, before and after Iaccoca......the Italians have done more with the company in the last few years than the entire previous administrations, back to Walter Chrysler. I want to see them get back into NASCAR and kick some A$$! The styling and the advertising are spectacular and the product just gets better!
      Scooter
      • 11 Months Ago
      Good news! Now they can quit pandering to African Americans in their TV ads, and focus on legit products instead of discount versions of high end luxury cars.
        design eye
        • 11 Months Ago
        @Scooter
        Where's the good news for your stained existence, Scooter? Lobotomy is a start.
      luigi.tony
      • 11 Months Ago
      Finally, Now it's time to dump a lot of the old tired Chrysler hardware.
        Jesus!
        • 11 Months Ago
        @luigi.tony
        You mean Daimler?
          m_2012
          • 11 Months Ago
          @Jesus!
          Chrysler. The Daimler stuff in the Chrysler lineup (LX) was the only decent thing Chrysler had.
        Bill Burke
        • 11 Months Ago
        @luigi.tony
        Actually the Chrysler Group model line up will be growing substantially as the old Mercedes hardware is shed. It should be noted that a lot of present Chrysler hardware will show up in Fiat vehicles, so this is a two way deal that will make Chrysler more competitive. I'm keeping my 2006 Chrysler Crossfire roadster safe in my garage, already classified by my collectors insurance company as a modern collectible, as a valuable tribute to the Mercedes/Chrysler glory days. Money in the bank.
        ChaosphereIX
        • 11 Months Ago
        @luigi.tony
        amen
      Black Dyanmite
      • 11 Months Ago
      Excuse Chrysler for being a sell-out. Literally! BD
      Pj Taintz
      • 11 Months Ago
      so chrysler is no longer a domestic company, it is now an italian company. This changes nothing in my eyes but to be clear there are now only 2, of the big 3 left domestically
        Carlo Sirna
        • 11 Months Ago
        @Pj Taintz
        no actually Chrysler is now owned by a company who is currently hostile to the Italian government and is going to move the production (and headquarters... trust me) out of Italy. they are just doing it slowly in order to avoid a violent reaction from the Italian public opinion
        sirjaysmith
        • 11 Months Ago
        @Pj Taintz
        You do know they were owned by the Germans for the last decade right?
          David
          • 11 Months Ago
          @sirjaysmith
          I thought they were just partnered with Daimler, not fully owned like what Fiat is about to do.
        Jesus!
        • 11 Months Ago
        @Pj Taintz
        Really one. 3/4's or more of Fords lineup are Euro now. GM is pretty much it.
          Daniel D
          • 11 Months Ago
          @Jesus!
          And GM is going backwards in the global market. They stuffed up Opel and now they have done it again with Holden.
          j.ziraldo
          • 11 Months Ago
          @Jesus!
          What does "3/4's or more of Fords lineup are Euro now" mean? Are we talking ownership or where the designers and builders work?
      Eggmania
      • 11 Months Ago
      i dont care about either one of these automakers
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