By Tom Hals and Deepa Seetharaman
WILMINGTON/DETROIT Nov 12 Italian automaker Fiat
must more than double its offer for a 3.3 percent stake
in automaker Chrysler Group LLC that is held by a union-related
trust, the trust claimed in a countersuit filed on Monday.
Fiat's offer of $139.7 million is "substantially below fair
market value," the United Auto Workers-affiliated trust said in
documents filed in Delaware's Court of Chancery.
Fiat must pay at least $342 million for the stake, the UAW
trust said in its response, which came nearly two months after
Fiat sued the trust for failing to sell the shares.
"Sale of the called shares at the price calculated by Fiat
would constitute a transaction prohibited by applicable federal
law," the UAW Retiree Medical Benefits Trust said.
The lawsuit was the latest twist in a long-running dispute
over the value of Chrysler between the UAW trust and Sergio
Marchionne, the chief executive of Chrysler and Fiat.
Marchionne is looking to buy the trust's entire 41.5 percent
stake in Chrysler, cementing Fiat's ownership of the company and
allowing the automakers to eventually merge.
The trust said it has a duty to maximize the value of its
Chrysler stake to cover rising healthcare costs for the
One point of contention is whether Chrysler's value would be
determined in relation to Fiat or Fiat's parent.
Fiat claimed that a clerical error in the agreement linked
Chrysler's value to Fiat's North American unit, even though the
parties intended it to be the parent. The UAW trust disgreed.
The trust, which is known as a VEBA or voluntary employees
beneficiary association, was created in 2007 to let General
Motors Co, Ford Motor Co and Chrysler shed their
obligation to pay lifetime medical benefits for their UAW
In 2009, when GM and Chrysler underwent government-funded
bankruptcy restructurings, the UAW VEBA took stakes in the
companies instead of the promised cash payments.
As part of the bankruptcy agreement, Fiat is able to
exercise call options to buy portions of the stake held by the
healthcare trust, which manages benefits for 824,000 retirees
from GM, Ford and Chrysler.
Fiat and the UAW trust declined to comment on the
countersuit, which was brought by Brock Fiduciary, which manages
the Chrysler stake.