Fiat said Wednesday (Jan. 1) it had signed an agreement to buy the remaining 41.46% stake it does not own in Chrysler Group from the UAW’s VEBA Trust, the last step needed before the Italian and U.S. carmakers can merge.
Automotive News reported that Fiat S.p.A. said the voluntary employee beneficiary association, which covers health care costs for 117,000 UAW retirees and family members, would receive $3.65 billion for the stake.
Chrysler also agreed to separately make a total of $700 million in four annual payments to the UAW’s trust fund.
The deal is expected to close on or before Jan. 20, Fiat said. Fiat Chairman John Elkann said in the statement he has been looking forward to this day since the rebuilding of Chrysler began in 2009.
The deal will allow Chrysler to avoid an initial public stock offering. Fiat will pay the trust $1.75 billion from cash on hand when the deal closes. The Turin-based company said it would not need to make any capital increase through a rights issue.
Chrysler will contribute $1.9 billion through a special dividend to complete the transaction for the 41.5 percent stake.
The $700 million will paid in a series of four, $175 million annual payments from Chrysler to the VEBA trust, but come with a change agreed to by the UAW.
With the payments, the UAW has agreed that its members will adopt the best practices in use in Fiat plants around the world, instead of those just in use within the United States, a Chrysler source explained.
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