Marchionne Believes Chrysler Not Needed to Save Fiat

The general opinion of the automotive press is that FiatFiatItaly, 1899 > present159 models
4864 photos
35 videos
is buying up ChryslerChryslerUnited States of America, 1925 > present70 models
873 photos
1 video
to take advantage of the company's strong North American sales to save the ailing Italian company. However, Sergio Marchionne who is CEO of both companies says that this is not the case. He believes that both companies can survive even if Fiat does not own the entire company. 

"There will have to be no covenants on the debt structure that exists within Chrysler, and I think we have to get over 80 percent of Chrysler. I don't think Fiat needs it," said Marchionne. 

Fiat is a majority investor in Chrysler but does not own the company. Therefore, it cannot take Chrysler's profits to pay for Fiat's debt. 

Marchionne's plan was to marge Fiat and Chrysler by 2015. Fiat owns 58.5% of Chrysler and is able to buy 3.3% of Chrysler stock every six months from the United Auto Workers, which owns roughly 40% of the company's stock.

Marchionne's announcement comes days after he two sides entered court arbitration about the stock price. Fiat assessed the stock's worth when it bought the company at $139.7 million for each 3.3% stock purchase. The UAW believes that the stock is worth $342 million because Chrysler is performing so well. The decision is expected by the end of the year. Comparing just their third quarter profits, Fiat made $164 million, and Chrysler made $706 million.

"We read the agreement in a way; they read it in another. Let the judge decide," said Marchionne.

Source: Automotive News Europe