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Fiat CEO Expects Fiat-Chrysler Merger To Be In 2014: Reports

2/3/2013 8:53 AM ET

The merger of Italian carmaker Fiat S.p.A. (FIATY.PK) with Chrysler Group LLC would be in the year of 2014, according to several reports on Sunday, quoted the Chief Executive Officer of Italian carmaker Sergio Marchionne, as saying.

On 9th January 2013, Chrysler Group said it received a "registration demand" from the UAW Retiree Medical Benefits Trust, also known as UAW voluntary employees beneficiary association or VEBA, for the sale of a part of the trusts ownership in Chrysler. The VEBA owns 41.5 percent of Chrysler shares, while Fiat SpA owns the remaining 58.5 percent of Chrysler.

Turin, Italy-based Fiat was entitled to further boost its ownership stake in Chrysler to 75.1 percent from the current 58.5 percent by exercising other call options on VEBA shares. Fiat can buy as much as 3.32 percent of Chrysler from the VEBA every six months between July 1, 2012 and June 30, 2016. However, the total amount Fiat can accumulate is limited to 16.6 percent.

According to a shareholder agreement of June 2009, VEBA requested to register the 16.6 percent stake in Chrysler to be sold through an initial public offering.

VEBA has reportedly maintained that some of its shares are worth twice what Fiat is offering to pay. Meanwhile, Fiat looking to buy the shares directly from VEBA and to repay debt owed to bondholders.

Fiat has already filed plans for the purchase of an additional 6.6 percent stake in Chrysler, with call options scheduled to be exercised in July 2012 and January 2013. However, VEBA and Chrysler are fighting a court case over the disagreement on the pricing of Chrysler shares, and also over VEBA failing to deliver the shares even after the first call option was exercised in July.

Chrysler, which was once part of German automotive company Daimler AG, emerged from Chapter 11 reorganization in June 2009 and was bought by Fiat in a U.S. government-brokered deal.

Fiat took control of Chrysler under the bailout deal and in early January 2012 raised its stake in the U.S. car maker to 58.5 percent in several tranches from the initial 20 percent it initially held. Chrysler's results were consolidated by Fiat Group since June 2011.

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by RTT Staff Writer

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