Chrysler after reaching an agreement to repay its loans to the United States and Canadian governments.
The purchase would raise Fiat’s ownership of Chrysler to 46%. Fiat, which owns 30% of Chrysler, effectively gained control of the automaker when it emerged from Chapter 11 bankruptcy in 2009.
“The transaction that we are announcing today … represents a historic step for Fiat and Chrysler and is a source of great satisfaction and pride for both,” Fiat Chairman John Elkann, said in a statement.
Fiat made the announcement after reaching an agreement with Chrysler and its shareholders.
The Turin, Italy automaker said it plans to exercise its right to purchase the additional 16% stake after the repayment of $7.2 billion in loans to the U.S. and Canadian governments occurs during the second quarter of this year.
“This is a fundamental step toward completion of the momentous integration of Fiat and Chrysler, initiated less than 2 years ago, that will result in the creation of a global automaker,” Fiat and Chrysler CEO Sergio Marchionne said in a statement.
Fiat’s share increase – the third in four months – is occurring faster than most expected.
“We have chosen to accelerate the pace to bring about, in the shortest possible time, the birth of a single group capable of fully leveraging the joint development of the respective international activities,” Marchionne said.
The investment by Fiat also brings the company closer to the 51% majority control that Marchionne has said he wants to achieve before issuing a public offering of stock.
Under a 2009 agreement with the U.S. and Canadian governments, Fiat must build a vehicle in the United States capable of achieving 40 m.p.g. before it can raise its ownership another 5%.
By Brent Snavely, Detroit Free Press