Fiat’s bid to gain full control of Chrysler is expected to become more expensive in a few weeks.
The reasons for this are the delay of a court ruling on a price dispute and Chrysler’s possible share flotation. The Italian carmaker owns 58.5 percent of Chrysler and has the right to buy 16.4 percent more within the next three years a price determined by a 2009 formula, when Chrysler was exiting bankruptcy.
However, a dispute over the price has ended up in a Delaware court, which has to decide whether Fiat must pay up to $1.70 billion for the stake. The sum is demanded by the UAW’s VEBA, the union’s retiree healthcare trust. The ruling is unlikely to arrive before the end of the year as Fiat hopes.
The amount VEBA wants is double the $754 million Fiat has calculated the stake is worth, based on the agreed formula. However, from January 1 VEBA gains the right to sell part of its Chrysler stake in an initial public offering. This gives VEBA important leverage in any future negotiations with Fiat, which may have to pay more for the stake.
Fiat-Chrysler CEO Sergio Marchionne said in October the legal dispute could be resolved by year-end, but law experts say the lawsuit could drag on for months.