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Fiat seals Chrysler deal - but is it enough?

Thursday, January 02, 2014 - 02:04

Jan 2 - Fiat shares soared after the Italian carmaker announced a deal to gain full control of Chrysler. The deal ends more than a year of talks and Fiat is paying less than many expected, but there are still questions as to whether it will be enough to rescue Fiat's ailing European sales. Joanna Partridge reports.

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A stellar start to 2014 for Fiat - in a deal that's been a long time coming. The Italian carmaker agreed to pay $4.35 billion to gain full control of Chrysler Group. That figure was less than many expected and brings an end to a year of tense talks. The move speeds up the merger between the two auto makers, allowing them to share resources. Fiat got the 41% stake in Chrysler it didn't already own from a retirement healthcare trust - and the Italian carmaker has done this without needing a capital increase through a rights issue. Steve Fowler is Editor of Auto Express. SOUNDBITE: Steve Fowler, Editor, Auto Express, saying (English): "People really expected Fiat to take full control of Chrysler. If you think about them living together for the last few years, now they're just getting married, but it's a good deal for both partners, a lot of technology sharing already going on between the two halves, a lot of platform sharing, a lot of engine sharing." The news was well-received by Fiat investors, its shares soared by as much as 16%. The deal is also a boost for Fiat CEO Sergio Marchionne, who's run both automakers since Chrysler's bankruptcy restructuring by the U.S. government in 2009. The talks between the two firms has been closely watched as Fiat needs deeper ties with Chrysler to achieve its long-term goal of cutting losses in Europe. Car sales in Europe remain sluggish, but an improvement in December in France and Spain has led to cautious optimism about the region's car market. The industry hopes the latest figures suggest the decline in Europe - Fiat's traditional stronghold - has bottomed out. SOUNDBITE: Steve Fowler, Editor, Auto Express, saying (English): "Fiat needs Chrysler more than Chrysler needs Fiat because the Chrysler potential is possibly greater than Fiat's at the moment. Europe is weak and that's where Fiat is strongest. But Chrysler, particularly with the Jeep brand as well have more global reach, especially in the Far East, in China, where Fiat doesn't have quite the foothold that it might want." The Fiat Chrysler deal is expected to close on or before January 20th. Marchionne's just beginning the journey towards his goal of turning Fiat and Chrysler into the world's seventh-largest auto group.

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Fiat seals Chrysler deal - but is it enough?

Thursday, January 02, 2014 - 02:04