Fiat will take stake in Chrysler

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Fiat might be throwing Chrysler a lifeline.

Fiat SpA and Chrysler LLC on Tuesday confirmed the Italian auto maker will take at least a 35% stake in Chrysler as part of a deal to share technology and bring small cars developed by Fiat to the U.S.

The move is an attempt to revive two of the world’s storied auto makers and is likely to eventually give Fiat control of Chrysler’s operations, people familiar with the matter said. Under terms of the deal, Fiat has the option of increasing that to as much as 55%, these people said.

Fiat, the stronger of the two car makers, wouldn’t immediately put cash into Chrysler. Instead, it would obtain its stake mainly in exchange for covering the cost of retooling a Chrysler plant to produce one or more Fiat models to be sold in the U.S., these people said. Fiat would also provide engine and transmission technology to help Chrysler introduce new, fuel-efficient small cars.

The deal is the latest maneuver by Fiat’s chief, Sergio Marchionne, who has pulled the Italian company back from the brink collapse since taking over in 2004.

This might be a great combination. We’ll see how it plays out.

  

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