Now that Fiat has finalized a deal to purchase the outstanding shares of Chrysler owned by the United Auto Workers' VEBA retiree heathcare fund without having to file for an IPO, you can count the Italian automaker's stockholders among the happy. The Detroit News reports that Fiat stock closed Thursday with a 12-percent gain for the day on the Borsa Italiana, having been up by as much as 15.8 percent during the day's trading, at prices not seen since mid-2011. One trader reasoned the run was because Fiat "paid less than the market had expected and there will be no capital increase to fund this."

But there are some who worry, including bank analysts and unions. The final price of the stake will be $4.35 billion – $1.9 billion in cash from Chrysler, $1.75 billion from Fiat and extraordinary dividends in the amount of $700 million paid over three years. Adding that sum to its ledger will raise Fiat's debt level to roughly 10 billion euros ($13.8 billion), which Citibank says will make it the most indebted OEM in Europe.

Italian unions are also concerned about what the deal means for the future. Fiat CEO Sergio Marchionne has had an at-times contentious relationship with both unions and the Italian government over the future of Italian manufacturing, a fact that makes headlines because Fiat is Italy's largest private employer. At least two left-leaning unions have publicly called on Fiat to give guarantees and to explain what the deal means for its Italian operations, while a centrist union argues this is "good news for Fiat workers, for the auto industry and for our country."

Marchionne has said the deal, set to close January 20, "will go down in the history books." He's probably right, with the question being how will it go down. Now that he can gain some access to Chrysler's $10-billion-plus cash reserve, if he can steer Fiat's European operations out of their doldrums through new investment and new models, finish putting the polish on Chrysler's product and move into new markets, then his name will join that of Ford CEO Alan Mulally atop the discussion about how the US auto industry recovered from The Great Recession. If it doesn't work, his name might yet end up opposite Mulally's. Nevertheless, he's done enough so far to earn some leeway; as another analyst told Reuters, "He's not getting any exposure to European recovery. The U.S. asset is not as good as its peers and needs money spent on it. Marchionne has shown he can get the job done but I'm still buying a dream."


I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.


    • 1 Second Ago
  • 6 Comments
      • 11 Months Ago
      [blocked]
      HVH20
      • 11 Months Ago
      Italian Design and Redneck Engineering, that actually sounds like a recipe for some awesome vehicles.
      GasMan
      • 11 Months Ago
      How do you say Chrysler in Italian? Fiat.
      thumerzs
      • 11 Months Ago
      The crappiest car company in Europe hooks up with the crappiest car company in America. I'm sure it will be a long and fruitful marriage.
      Andrew Pappas
      • 11 Months Ago
      This makes so much sense. Fiat and Chrysler have too many firewalls. This makes the whole operations much more homogeneous. Now it will all come down to execution. So far the facelifts have been great, but the new vehicle rollouts (500L, Dart, and Cherokee) have been good products with poor execution of rollout or details.