When President Obama took office, the American auto industry was on the brink of collapse.
Fiat S.p.A. through its wholly owned subsidiary, Fiat North America, today completed its previously announced acquisition of all of the UAW VEBA Trust’s equity in the Chrysler Group. This means that Chrysler Group is now a wholly owned subsidiary of Italian Fiat with considerable help from U.S. taxpayers who financed the 2009 reorganization of the bankrupt company.
The terms include a distribution paid by Chrysler Group to its members on 21 January 2014 of $1.9 billion and a cash payment by FNA to the VEBA Trust of $1.75 billion. Fiat funded the latter payment from cash. Chrysler Group also funded the distribution from cash. The purchase of the 41.5% stake owned by a United Auto Workers for a a total of $4.35 billion ends a nasty dispute between the UAW and Fiat about the market value of Chrysler. The deal appears to value the UAW Chrysler Group holdings – not publicly traded – at more than $10 billion, which seems to AutoInformed a fire sale bargain.
Chrysler Group and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, aka UAW, entered into a Memorandum of Understanding under Chrysler Group’s existing collective bargaining agreements. This provides for additional contributions by Chrysler Group to the VEBA Trust of $700 million in four equal annual installments, the first of which was paid with the closing of Fiat takeover.
As part of the deal, FNA and the VEBA Trust will dismiss with prejudice the proceedings before the Delaware Court of Chancery where the UAW and Fiat were disputing the value of the VEBA holdings.
