Fiat looks for 51% stake in Chrysler

I don’t think anyone is too surprised by this development as Marchionne’s Fiat will reap more rewards for the risk the company took back in 2009.

From Auto News.com:

Fiat SpA, the Italian carmaker that owns 20 percent of Chrysler Group LLC, may boost the holding to more than 50 percent before an initial public offering by the U.S. automaker, the companies’ chief executive officer said.

β€œI think it is possible. I don’t know whether it is likely, but it is possible that we’ll go over the 50 percent mark if Chrysler decides to go to the markets in 2011,” Sergio Marchionne, 58, told reporters at the Milan stock exchange today. β€œIt will be advantageous if that happens.”

Fiat received the stake as part of Chrysler’s 2009 bankruptcy reorganization under government supervision. It expects to receive an additional 15 percent this year when Chrysler makes a small engine in the U.S. and meets sales objectives outside of North America. Fiat has an option to increase the holding to 51 percent, by buying an additional 16 percent, after Chrysler repays U.S. and Canadian government loans.

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Fiat moving toward 51% ownership of Chrysler

Fiat could very likely own 51% of Chrysler in the next few years. If that happens Sergio Marchionne might have made the biggest and smartest one sided bet of the great recession!

From Detroit Free Press:

Sergio Marchionne, CEO of Fiat and Chrysler, told analysts Thursday that Fiat plans to raise its ownership of Chrysler from 20% to 35% by the end of 2011 “barring unforeseen circumstances.”

Marchionne’s comments came in a conference call after the Italian automaker reported third-quarter earnings of 170 million euros, or $236 million.

Fiat can increase its Chrysler stake in 5% increments by meeting three objectives. The first objective, to be achieved early next year, is the launch of a 1.4-liter four-cylinder MultiAir engine built at its Dundee, Mich., factory, in the Mexican-assembled Fiat 500 minicar.

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