UAW trust demands Fiat pay $342M for Chrysler shares
Last month, we brought you the latest news in a rather tenuous ordeal between Fiat and the United Auto Workers over the future of the Italian automaker’s stake in Chrysler. The union contended that Fiat failed to make an adequate offer for the 3.3-percent stake that was sought. Fiat offered $139.7 million for the shares in July, which the UAW rejected.
We now have word of the union’s counter offer of $342 million – more than double what Fiat proposed. According to Reuters, the entity in question is the UAW’s healthcare trust, known as Voluntary Employee Beneficiary Association, or VEBA, which currently owns 41.5 percent of the American automaker. Fiat boss Sergio Marchionne has voiced his intent to eventually purchase the trust’s full 41.5 percent stake in Chrysler as part of a long-term unification plan.
Following the initial offer from Fiat, the trust refused to sell the 3.3 percent share in July, which resulted in a lawsuit brought by Fiat. As part of this counteroffer, VEBA has brought a counter suit, as well as a statement claiming that the initial Fiat offer was “substantially below market value.”
VEBA originated from the 2007 auto bailouts, in which retiree medical benefits were shed off into their own entity to facilitate restructuring of the automakers. Rather than taking cash to fund its restructuring, VEBA took the Chrysler stock, which is the center of this current conundrum. According to a spokesperson for the trust, “sale of the called shares at the price calculated by Fiat would constitute a transaction prohibited by federal law.” At this time, neither the automaker, the trust, nor the Securities and Exchange Commission have commented on the proposed transaction.
UAW trust demands Fiat pay $342M for Chrysler shares originally appeared on Autoblog on Tue, 13 Nov 2012 13:01:00 EST. Please see our terms for use of feeds.