Chrysler and Fiat Make It Official

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CNN

Chrysler and Fiat Make It Official

Automaker sells itself to new owners, including Italian automaker, the UAW and the U.S. and Canadian governments.

by
David Goldman

NEW YORK - Chrysler and Italian automaker Fiat on Wednesday officially signed a strategic alliance brokered by the U.S. government, after the Supreme Court cleared the path for the deal late Tuesday.

Fiat will initially take a 20% stake in the company, which can go up to 35% if it reaches certain goals.

"This is a very significant day ... for the global automotive industry as a whole," said Sergio Marchionne, who was named chief executive of Chrysler on Wednesday. "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."

The deal formed a new company, called Chrysler Group LLC, after the former Chrysler LLC sold nearly all of its assets -- except for some debts and liabilities -- to the new firm.

Chrysler Group is mostly owned by the United Auto Workers union (a 55% stake) and will give minority stakes to governments: 8% for the United States and 2% for Canada.

The U.S. Supreme Court on Tuesday cleared the way for the deal after delaying the sale pending review of a case brought by Indiana state pension funds challenging Chrysler's bankruptcy. Those funds argued that they and other lenders deserved better treatment by the bankruptcy court.

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