Fiat has exercised an option to buy an additional 3.3 percent of Chrysler, bringing it closer to full control of the American automaker.
As part of the 2009 deal that originally gave Fiat 20 percent of Chrysler and the promise for more if certain targets were met
, Fiat also gained the option to buy 3.3 percent of Chrysler every six months during the three-year period ending July 1, 2014.
If all its options were exercised, Fiat would own just over 75 percent of Chrysler’s shares, which would be sufficient for full control of the American automaker.
Currently, Fiat owns 58.5 percent and the remainder are owned by the VEBA healthcare trust linked to the UAW. But with the announcement this week that Fiat will purchase an additional 3.3 percent, on top of two previously announced purchases, its stake will increase to 68.49 percent.
Fiat is willing to pay $254.7 million for the latest parcel of shares, though the actual value will be determined by a judge in a Delaware court. Fiat’s shares aren’t publicly traded.
With full control of Chrysler, Fiat would finally be able to tap into the American automaker’s cash reserves in order to help fund development of new models for the struggling Fiat brand as well as Alfa Romeo. Under the current structure, Fiat gains a share of Chrysler’s profits but can’t access its cash reserves.
Fiat suffers from an aging lineup and shrinking sales in its home market of Europe and would have lost $307.4 million during the first quarter of the year if not for Chrysler’s profits. Instead, it posted a gain of $40.6 million._______________________________________Follow Motor Authority on Facebook, Twitter, and Google+.