Fiat deal could give Chrysler more support in the U.S.


Shares of Fiat (FIATY) soar over 15% after the automaker finally works out a deal to gain complete control of Chrysler.

The deal price of $4.35B came in below what analysts thought it would take to get a UAW healthcare trust to sign off on.

What to watch: The impact on the automobile industry (GM, F, TM, HMC, NSANY) is that a tighter combination of Chrysler and Fiat could give both brands more funds to invest in new models and production. Supporting Chrysler in the vibrant U.S. market could be a particular focus.

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Comments (8)
  • lcrupp
    , contributor
    Comments (87) | Send Message
     
    There's only one problem with this theory folks. This is still Chrysler. And yes, the assembly line workers still drink beer and smoke pot on their lunch hour.
    2 Jan 2014, 10:36 AM Reply Like
  • Tdot
    , contributor
    Comments (8409) | Send Message
     
    Well, Fiatchrysler, and the last two syllables are silent. But we understand what you mean. Same old workers, same old plants.
    2 Jan 2014, 11:04 AM Reply Like
  • joshvegas
    , contributor
    Comments (511) | Send Message
     
    Why IPO is cancelled?
    2 Jan 2014, 10:39 AM Reply Like
  • Tdot
    , contributor
    Comments (8409) | Send Message
     
    The UAW wanted an IPO to sell off their shares at a market-established price, expecting to get billions more than what Fiat was offering.

     

    It would appear that they failed to get what they had hoped for. Perhaps they hired some analysts to figure out what a fair and sustainable price might be for the UAW shares in an IPO, and it worked out lower than expected.

     

    So they cut their losses, taking what they could get directly from Fiat.
    2 Jan 2014, 11:03 AM Reply Like
  • joshvegas
    , contributor
    Comments (511) | Send Message
     
    Thanks, Tdot for explanation. I asked because some time in the news were articles about how Fiat needs to reach agreement with UAW to do IPO afterwards - week or two weeks ago, but now, when deal is clarified, IPO is no longer on the table.
    2 Jan 2014, 11:24 AM Reply Like
  • Tdot
    , contributor
    Comments (8409) | Send Message
     
    No - Fiat never wanted an IPO of Chysler - they wanted full ownership, at least initially. Only the Union shareholders wanted the IPO.

     

    Now Fiat could always do an IPO of the combined Fiatchrysler on their own after they take over the rest of Chrysler's shares, like if they need to raise cash or something.

     

    Or Fiatchrysler could try spinning off Chrysler into an IPO if they determine like Daimler that it wasn't such a hot idea after all.

     

    Who can say what the future holds in the global automobile industry.
    2 Jan 2014, 11:44 AM Reply Like
  • joshvegas
    , contributor
    Comments (511) | Send Message
     
    Ok, wrong impression from the news - I understood that IPO is supported and planned by both parties.
    2 Jan 2014, 01:04 PM Reply Like
  • User 14980502
    , contributor
    Comment (1) | Send Message
     
    My view is that as long as the UAW is in the equation, that means trouble. They will eventually bankrupt the companies they occupy (as they did with the big 3; Ford was basically bankrupt when GM and Chrysler went under), and they're itching to strike, and obtain bankrupting wages all over again. Meanwhile, the Japanese companies are free of the UAW, allowing them to invest in better products, and enjoy the huge competitive advantage resulting. Remember, in a struggle between the UAW and the survival of the U.S. automakers, the U(ion) A(lways) W(ins).
    5 Jan 2014, 02:56 PM Reply Like
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