* Chrysler becomes wholly-owned subsidiary of Fiat
* Board meets on Jan. 29 to discuss new HQ and listing
* New industrial plan, including models, due in May
MILAN, Jan 21 Fiat has completed its
buyout of Chrysler, making the U.S. business a wholly-owned
subsidiary of the Italian carmaker as it gears up to use
their combined resources to turn around its loss-making
operations in Europe.
The company annouced on Jan. 1 that it had struck a $4.35
billion deal - cheaper than analysts had expected - to gain full
control of Chrysler, ending more than a year of tense talks that
had obstructed Chief Executive Sergio Marchionne's efforts to
create the world's seventh-largest auto maker.
Fiat said on Tuesday that it had completed the acquisition
of the remaining 41.46 percent stake in Chrysler from a retiree
healthcare trust affiliated with the United Auto Workers (UAW)
union. The trust, known as a voluntary employee beneficiary
association, or VEBA, received $3.65 billion in cash for the
stake, $1.9 billion of which came from Chrysler and $1.75
billion from Fiat.
Chrysler has also committed to giving the UAW trust another
$700 million in four equal annual instalments, the first of
which was paid in connection with the deal closure, Fiat said.
The Chrysler buyout talks have been closely watched by debt
and equity investors because Fiat's long-term plan to cut losses
in Europe depends on its ability to deepen ties with Chrysler.
The U.S. business is now a profit centre for Fiat, but the
two companies are still forced to manage their finances
separately. A full merger will make it easier - but not
automatic - to combine the cash pools of the two companies,
giving Fiat more funds to expand its product line-up.
Fiat will discuss the merged company's future headquarters
and a potential listing outside Italy at a board meeting
scheduled for Jan. 29.
The company is widely expected to move its headquarters
outside Italy, where Fiat was founded 115 years ago - a
sensitive topic among local unions and politicians eager to
protect jobs in Fiat's home market.
Marchionne said at the Detroit car show last week that a
listing of the combined entity was on the agenda for this year.
While New York is the most liquid market, Hong Kong is also an
option, the CEO said, pledging to stay at the helm of the merged
group for at least three years.
The first big test for the merged Fiat-Chrysler will be a
three-year industrial plan Marchionne is expected to unveil in
May, in which he will outline planned investments and models.
While analysts have widely welcomed the Chrysler deal, which
Marchionne funded without needing a rights issue, they have been
more sceptical about the group's rising debt and 61-year-old
Marchionne's ability to cut losses in Europe.
Fiat has said its new strategy will focus on revamping its
Alfa Romeo brand and keeping production of the sporty marque in
Italy as it seeks to utilise plants operating below capacity,
protect jobs and compete in the higher-margin premium segment of
Shares in Fiat were up 1.77 percent at 7.46 euros by 1630
GMT, outperforming a 0.11 percent rise for Milan's blue-chip