Fiat announced that it would buy the shares of the Voluntary Employees Beneficiary Association (VEBA) of the United Auto Workers union in Chrysler. For the shares of stock, Fiat calculated payment of US$254.7 million.
The amount was based on Chrysler's earnings applied with a market multiple. The said earnings are before interest, depreciation and amortization, and taxes.
The United Auto Workers union's VEBA held 41.5% while Fiat owned 58.5% of the Auburn Hills, Michigan-based company.
Since the middle of 2012, Fiat was exercising options, buying less than 3.3% of the holdings every six months under the terms of an acquisition agreement. The remaining holdings in the trust were yet to be taken possession of pending a court decision. A judge in Delaware would still have to decide how much Fiat should spend for the initial tranche.
This series of purchases would lead to Fiat having full control of Chrysler. This would enable the merging of the two carmakers by their chief executive officer, Sergio Marchionne. The merger would enable the combined company to compete with global leaders in the auto industry.
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