The Chrysler Group's Merger with Fiat

929 WordsJan 30, 20184 Pages
The Chrysler Group LLC initial public offering (IPO) was initiated by a trust known as the United Auto Workers (UAW) Retiree Medical Benefits Trust to cover medical benefits for retired workers who owned 41.5% of the company. The trust was created in 2007 as a way of reducing Chrysler's financial liability of paying existing workers and former employees’ health care costs and retirements. Initially, the trust was not supposed to have a large share of its assets in the form of stock, but with Chrysler running out of cash the following year, and falling into bankruptcy in 2009, the only asset it could offer was its own stock. Fiat and Chrysler formed a partnership in 2009, when Chrysler emerged from Chapter 11 bankruptcy protection in the United States. Since then, it has gradually increased its ownership, and combining its operations. Fiat owned 58.5% of Chrysler, and prior to the IPO offer in September 2013, Fiat long wanted to acquire the remaining stake from UAW, but the two sides could not reach an agreement over what is a fair price. As a result, UAW decided to file for IPO, using a provision of the bankruptcy agreement that allowed it to require registration for an IPO. However, after further negotiations, the Italian company settled a $4.35 billion deal to buy the remaining shares (41.5%) from UAW in early January 2014, avoiding a planned IPO of the third-biggest American carmaker . As a result of the buyout, Chrysler became a wholly-owned subsidiary of Fiat.

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