JadenSmith

Fiat and Chrysler are both helmed by CEO Sergio Marchionne. The previous is faring terribly in Europe, and needs a cash infusion. By joining the businesses, Marchionne thinks a solution is available. Will you be trying to buy or sell a used or new van? If this portrays you, look at Gus Johnson dealership Spokane!

[b]Chrysler and Fiat already run as 'one car company'[/b]

According to the Detroit Free Press, Marchionne believes that Chrysler and Fiat are basically one company by now anyway due to the way they run.

“We are here to try and build value,” he said.

Of the stock, Fiat already owns 85.5 percent. The other 41.5 percent is owned by the voluntary employee beneficiary association trust fund called UAW Retirees Medical Benefits Trust.

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[b]Arguing over worth[/b]

There is a current case blocking Fiat from buying any Chrysler shares. Fiat offered to pay $139.7 million for about 3.3 percent of the Chrysler shares owned by the trust right now. Evidently the trust believes the value is closer to $381 million and does not want to sell.

United Auto Workers Retirees Medical Benefits Trust has the right to initiate an IPO as early as Jan 2013, and Marchionne is apparently looking forward to the day. He has gone on record as saying that he is willing to purchase up Chrysler's shares on the open industry, and that he will cooperate with the trust during this period of changeover.

[b]Fiat European sales[/b]

Fiat has been losing money on Europe sales where records are showing year over year drops in sales for the last five years in a row. Fiat might be able to use Chrysler’s cash to keep funding European operations during tough times if it acquires the company.

However, according to Marchionne, restrictions in the lending agreements between the separate car manufacturers prevent Chrysler from funding the operation of Fiat.

“We are very, very respectful of minority interests in the U.S. and there are firewalls for cash flow,” Marchionne said. “When we borrowed The $7 billion last year, we borrowed it with the very clear understanding that we would segregate cash and cash flow.”

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[b]Sources[/b]

Bloomberg BusinessWeek
Co.Create
Detroit Free Press