Financial News

  • 3 January 2014, 11:30

Fiat-Chrysler Merger Deal Sends Shares Up

Fiat shares have surged after the Italian carmaker announced it had reached an agreement to gain full control of Chrysler.

The $4.35bn (£2.6bn) deal aims to merge Fiat and Chrysler into the world's seventh-largest auto group.

In Milan, Fiat shares surging 15% in the biggest gain in over three years.

Under the deal announced on New Year's Day, Fiat will acquire the 41.46% stake in Chrysler it did not already own from a retiree healthcare trust affiliated with the United Auto Workers union.

The agreement ended more than a year of tense talks between the trust, known as a voluntary employee beneficiary association or VEBA, and chief executive Sergio Marchionne.

"The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organisation," Mr Marchionne said in a statement.

The deal cements Mr Marchionne's reputation as a skilled dealmaker about a decade after he took the helm of Fiat.

Mr Marchionne has also run Chrysler, the third largest US automaker, since its 2009 government-funded bankruptcy restructuring.

The merger will create a global group who could challenge major industry players such as General Motors.

It will make it easier to combine the cash pools of the two companies.

Chrysler's profits have helped prop up Fiat on the balance sheet as the Italian automaker struggles in a down European market.

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