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Fiat shares surge after deal to buy remaining Chrysler stake | |
(about 4 hours later) | |
Shares in the Italian car giant fiat surged over 15% on Thursday following the announcement of its plan to buy the remaining 41% of Chrysler it does not own. | |
Fiat has owned a majority stake in the US company since 2009. | Fiat has owned a majority stake in the US company since 2009. |
The agreement ends long negotiations with the current owners, Veba, the healthcare trust affiliated to the United Auto Workers' union (UAW). | The agreement ends long negotiations with the current owners, Veba, the healthcare trust affiliated to the United Auto Workers' union (UAW). |
The move will create the world's seventh-largest car company. | |
Chrysler and Fiat will pay the trust an initial $3.65bn (£2.2bn). | Chrysler and Fiat will pay the trust an initial $3.65bn (£2.2bn). |
Once the deal is signed off, Chrysler will pay Fiat another $700m. | Once the deal is signed off, Chrysler will pay Fiat another $700m. |
Fiat's chief executive, Sergio Marchionne, plans to widen the company's global reach. | Fiat's chief executive, Sergio Marchionne, plans to widen the company's global reach. |
The Veba trust looks after medical benefits for 117,000 retired Chrysler workers and their dependents. | The Veba trust looks after medical benefits for 117,000 retired Chrysler workers and their dependents. |
Robert Naftaly, chair of the committee that governs the trust said: "This agreement is in the best interests of the trust's UAW Chrysler retiree members and their families who rely on the trust to provide vital health care benefits." | Robert Naftaly, chair of the committee that governs the trust said: "This agreement is in the best interests of the trust's UAW Chrysler retiree members and their families who rely on the trust to provide vital health care benefits." |
Benefits | Benefits |
The alliance between the two companies came amid the major restructuring of the US car industry following the financial crisis of the late 2000s. | The alliance between the two companies came amid the major restructuring of the US car industry following the financial crisis of the late 2000s. |
The link-up gave Fiat access to the vast US car market, while Chrysler was able to benefit from the Italian firm's expertise in developing small, fuel efficient vehicles. | The link-up gave Fiat access to the vast US car market, while Chrysler was able to benefit from the Italian firm's expertise in developing small, fuel efficient vehicles. |
Recently, Chrysler reported a 22% rise in third-quarter profits to $464m, with net revenue up 13.5% to $17.6bn. | Recently, Chrysler reported a 22% rise in third-quarter profits to $464m, with net revenue up 13.5% to $17.6bn. |
The company said its results had been helped by strong sales of its Jeep Grand Cherokee and the Ram 1500 pickup. | The company said its results had been helped by strong sales of its Jeep Grand Cherokee and the Ram 1500 pickup. |