Chrysler Group LLC and Fiat Group announced that they have finalized their global strategic alliance. Fiat will contribute its world-class technology, platforms and powertrains for small- and medium-sized cars, allowing the company to offer an expanded product line including environmentally friendly vehicles increasingly in demand by consumers. Chrysler will also benefit from Fiat’s management expertise in business turnaround and access to Fiat’s international distribution network with particular focus on Latin America and Russia.
“This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole,” said Sergio Marchionne, who was named Chief Executive Officer of Chrysler Group LLC. “From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry. We now look forward to establishing a new paradigm for how automotive companies can operate profitably going forward.”
Under the terms approved by the U.S. Bankruptcy Court in New York and various regulatory and antitrust regulators, the company previously known as Chrysler LLC formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC.
Chrysler Group in turn issued to a subsidiary of Fiat a 20 per cent equity interest on a fully diluted basis in the new company. Fiat’s equity interest will increase in increments by up to a total of 35 per cent in the event that certain milestones mandated by the agreement are achieved, but Fiat cannot obtain a majority stake in Chrysler until all taxpayer funds are repaid.
The new Chrysler will be managed by a nine-member board of directors, consisting of three directors to be appointed by Fiat, four directors to be appointed by the U.S. government, one director to be appointed by the Canadian government and one director to be appointed by the United Auto Workers’ Retiree Medical Benefits Trust. The Board is expected to name C. Robert Kidder as Chairman.