Fiat Seeks Court Ruling on Chrysler Price in Fund Dispute
Fiat SpA (F) said it asked a U.S. court to confirm the price it has to pay to increase its controlling stake in Chrysler Group LLC as the Italian carmaker didn’t reach an agreement with the United Auto Workers retiree health fund.
Fiat is seeking a judgment from Delaware Chancery Court, the Turin-based manufacturer said yesterday. Fiat wants to acquire about 3.3 percent of Chrysler from the union’s health-care trust, known as VEBA. That would raise Fiat’s stake in Chrysler to 61.8 percent, according to the statement.
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“It is unfortunate that we were unable to resolve the issue without the assistance of the courts,” Sergio Marchionne, chief executive officer of Fiat and Chrysler, said in the statement. “Chrysler’s working relationship with the UAW continues strong and is not at all impacted by the resolution of this matter.”
Patty McCarthy, a spokeswoman for the VEBA, declined in an e-mail to comment.
Marchionne, who plans to combine the two manufacturers to boost sales to more than 100 billion euros ($129 billion) by 2014, is relying on profit from Auburn Hills, Michigan-based Chrysler as Fiat struggles to end losses in Europe. The company expects the court ruling soon, Marchionne told journalists today at the Paris Motor Show.
“The VEBA doesn’t want to sell at a distressed price because their approach has to be to maximize their return,” said Joe Phillippi, principal of consulting firm AutoTrends Inc. in Andover, New Jersey. “Sergio wants this done now because it’s likely at a rock-bottom price in this environment, given Fiat’s troubles. One can see why the two are at loggerheads.”
Fiat, which didn’t provide the purchase price, will pay less than 200 million euros for the added holding, Marchionne, 60, said in a June interview.