Fiat to buy control of Chrysler, eyes Canadian share
Italian automaker Fiat SpA said Friday that it will buy the Treasury’s remaining stake in Chrysler Group LLC, freeing the automaker of U.S. government ownership — and said it was interested in Canada’s share.
The company notified the U.S. Treasury that it will exercise an option to buy the government’s six percent stake. The price will be negotiated within 10 business days, or by around June 10. When the sale would happen remains unclear. But Fiat is moving quickly to take a controlling stake in Chrysler, which it has run since the company left bankruptcy protection in June of 2009.
Fiat may also be interested in acquiring the small piece of Chrysler that’s owned by the Canadian and Ontario governments.
Sergio Marchionne, chief executive of Fiat and Chrysler, said he has not discussed the possibility with Canadian authorities, but would be interested "at a reasonable price," the Reuters news agency reported from Switzerland.
"Under the current rules, we do not have the right to exercise the call option on the Canadian bit," Marchionne said.
Marchionne and Finance Minister Jim Flaherty are scheduled to visit the Chrysler Etobicoke Casting Plant in Toronto together on Monday.
The Canadian and Ontario governments hold a combined 1.7 percent stake in Chrysler, when the company restructured in bankruptcy court two years ago.
Adding the U.S. government’s share will give Fiat 52-percent ownership of Chrysler. That’s likely to rise to 57 percent before the end of the year when Chrysler begins producing a small car in the U.S.
Fiat received a 20 per cent stake in Chrysler after the bankruptcy in exchange for management expertise and technology. The Italian automaker has gradually raised its stake by meeting benchmarks set by the government. Last week it paid about $1.3 billion to buy another 16 per cent of the company.
On Tuesday, Chrysler repaid a total of $7.6 billion in loans from the U.S. and Canadian governments by refinancing them through a combination of bank loans, bond sales and the investment from Fiat.