Italian automaker Fiat SpA is set to purchase the remaining stock of Chrysler Group LLC that it does not own from a union-controlled trust fund in a $4.35 billion deal that will combine the two automakers.
Fiat has owned a majority stake of Chrysler since the American company emerged from bankruptcy in 2009, in a deal arranged by the Obama administration. The partnership has since helped Chrysler, which is based in Auburn Hills, Mich., return to profit. The United Auto Workers union controls 41 percent of the company and was expected to be planning an initial public offering of that stock for 2014, but on Wednesday Fiat agreed to purchase the remaining shares to complete its merger of Chrysler and become the world's seventh-largest automaker.
"I have been looking forward to this day from the very moment that we were chosen to assist in the rebuilding of a vibrant Chrysler back in 2009," Fiat Chairman John Elkann said in a press release. "The work, commitment and achievement I have witnessed from Chrysler over the past four and a half years is nothing short of exceptional."
The deal will consist of $1.9 billion from Chrysler and $1.75 billion from Fiat. Chrysler also will make $700 million in four annual payments after the close of the deal, which Fiat said likely will occur on Jan. 20.
Fiat likely stands to benefit more from the merger, as sales of Chrysler trucks have helped boost the Italian automaker's profits, which are lagging amid a troubled economic market in Europe. Chrysler profited $464 million during the third quarter of 2013, while Fiat earned $260 million during that same quarter.
Sergio Marchionne, CEO of Fiat and Chrysler, gave no signal of how the merger would change product plans or management, or whether the merged company would be headquartered in the United States.
"I will be forever grateful to the leadership team for the support and unwavering dedication shown to the integration project that today has taken its final shape," Marchionne said in a press release. "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 organization that will ensure all employees a challenging and rewarding environment."
Correction (01/02/14): This article has been modified to correct the amount of the Fiat-Chrysler deal.