Fiat Shares Reach Highest Level in Two Years on Chrysler Buyout Rumors image

Fiat’s shares increased more than 4% today, May 28th, to a new peak since August 2011, due to speculation on Chrysler deal.

Today Italian newspaper published reports according to which the Italian automaker is in the decisive negotiations phase and Corriere della Sera said at the end of last week that Fiat will pay less than $3 billion for the 41.5% stake in Chrysler, owned by US healthcare trust fund VEBA.

Yesterday, April 27th, the Wall Street Journal said that Fiat CEO Sergio Marchionne is still in talks with Bank of America, Goldman Sachs, Deutsche Bank and other banks for a potential financing to acquire Chrysler. Last month, anonymous sources said that Fiat might secure financing to purchase the rest of Chrysler in May.

Sergio Marchionne, Fiat and Chrysler CEO, plans to merge the two automakers and create the seventh largest auto group, also relying on Chrysler’s cash flow to help Fiat make up for the loss in Europe and build economies of scale.

Chrysler is of utmost importance for Fiat, which relies on the US automaker to sustain earnings after the loss in Europe widened last year to more than 700 million euro.

Source: Reuters