Fiat is currently discussing with banks the financing options as it prepares to buy the rest of Chrysler stake.
Fiat and Chrysler CEO Sergio Marchionne has had talks with banks to help Fiat acquire at least some of the 41.5% stake owned by VEBA, the United Auto Workers medical benefits trust for Chrysler retirees, according to an anonymous source. Still, a final deal might be reached in months as the two companies disagree on the value of the shares.
Marchionne is considering a bridge loan to see the deal complete and Fiat might pay around 2.23 billion euro ($2.98 billion) to buy the remaining stake, according to Goldman Sachs Group. Fiat is relying on Chrysler to make up for the loss in Europe as the Italian automaker plans to breakeven in 2015. Fiat, which would have reported a 1.04-billion euro loss in Europe if it wasn’t for Chrysler’s help, has been trying to acquire the remaining shares to have access to the US automaker’s cash and push integration of the two.
“We believe the deal remains inevitable,” said Max Warburton, an analyst at Bernstein Research in Singapore. “The move will allow Fiat and Chrysler to pool cash in due course and ensure that Chrysler’s cash generation can support Fiat.”
Recently, Marchionne said that Fiat plans to increase profit this year to 4.5 billion euro from 3.81 billion euro in 2012 and he is confident that the merger with Chrysler will take place until the end of 2014.