Fiat will exercise an option to purchase 3.3% in Chrysler, part of its plan to acquire the entire company.
Fiat announced it has already notified the minority shareholder, VEBA, of its intention to purchase the 3.3% stake for $198 million, according to the company’s statement made on Thursday, January 3rd. It is not sure whether VEBA, which is a retiree healthcare trust fund affiliated with the United Auto Workers union, will accept the offer.
The two companies are still locked in a legal battle regarding the price for another 3.3% stake the Italian automaker attempted to buy in 2012. According to Fiat, the Delaware court will decide the price for that stake in the following months. Currently Fiat owns 58.5% of Chrysler and VEBA the rest. If the Italian automaker’s plan to acquire both 3.3% stakes will be successful, Fiat will own 65.17% of the American automaker.
According to Sergio Marchionne, the CEO of both automakers, if Fiat will acquire Chrysler it will help the Italian company support its struggling operation sin Europe, boost earnings and restructure its debt. VEBA took the stake in Chrysler in 2009, during the automaker’s government-financed restructuring and now it plans to maximize the holding’s value to cover increasing healthcare costs for Chrysler’s retirees.