Chrysler and Fiat complete deal
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| Wed, 06-10-2009 - 10:53am |
Fiat and Chrysler have completed the strategic alliance that will put Chrysler's good assets into a new firm.
Fiat chief executive Sergio Marchionne will take control of the new company, which will begin operating immediately.
Fiat is not paying any money for its 20% of the new firm but will contribute technology to make smaller Chryslers.
The deal was completed on Wednesday after the US Supreme Court dismissed an appeal against it from three Indiana state pension and construction funds.
"This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole," said Mr Marchionne.
The deal paves the way for Chrysler to emerge from bankruptcy protection.
Debt problems
Fiat's shareholding will expand to 35% if certain targets are met.
The United Auto Workers union gets 55% of the new company, while the US and Canadian governments will take stakes of 8% and 2% respectively.
The pension funds, which hold about $42m (£26.3m) of Chrysler's $6.9bn in secured loans, were opposed to the sale, saying it inverted usual bankruptcy practice by paying unsecured creditors, such as the union, ahead of secured lenders.
Chrysler filed for bankruptcy protection on 30 April, suffering from depleted sales, huge debts and crippling labour, pension and healthcare costs.
The new Chrysler will still have its headquarters in the US state of Michigan and will produce Chrysler, Jeep and Dodge branded vehicles and Mopar spare parts.



I was watching a business show about the merger. One pundit was doubtful. He claimed FIAT was also known as "fix it again tony".
We can all hope for the best. However this stimulus has resulted in thousands of lay offs of former Chrysler dealer employees.
I wonder if these real job cuts made by the Obama administration will count against any imaginary Obama job gains?
"Chrysler dealer employees'
It's a shame to see dealerships close but if they're not selling the cars.....
Huh? Chrysler was foundering last year (in its latest round of financial distress).
The stimulus is not culpable for Chrysler layoffs. Chrysler's lousy leadership and poor response to changing circumstances was responsible. They made a tough (and far too late) decision to lop off the weaker dealer units rather than carry even more deadweight.
The dealers paid the price of poor decisions at the highest levels. Dammit, Chrysler has had multiple opportunities to get its act together and learn from past lessons.
With the Fiat merger, they have a chance to re-invent themselves and POSSIBLY do the Lazarus act again. Fiat (according to my auto-savvy neighbor) has a better reputation than Chrysler and is looking to expand global market share. Maybe they have resurrection powers equal to the task. Hope they have better luck than Daimler did!
Jabberwocka