Fiat Upping Chrysler Stake to 46%

Great illusions like Harry Houdini say pulling off a trick is all about misdirection - the audience has its attention occupied by some sort of story or object, allowing the magician to pull the rabbit out of the hat. This is exactly what we think happened in the story we are about to tell you!

While all the journalistic world was preoccupied with this year’s edition of the New York International Auto Show, Fiat SpA CEO Sergio Marchionne pulled the figurative rabbit out of the hat in the form of an extra 16 percent Chrysler stake.

Automotive News is reporting that Fiat will pay $1.27 billion for an additional 16 percent slice of the American carmaking giant Chrysler. If all goes according to the plan put together in 2009, the Italian carmaker could push its holding to 51 percent by the end of the year. If that happens, Marchionne would push for an IPO that would help with securing finances more easily.

“The move today marks a triumph for Marchionne, as he has persuaded the U.S. Treasury and UAW union to let him do it two years earlier than the original master agreement stated,” said Max Warburton, a Sanford C. Bernstein analyst in London, who has a “market perform” rating on the stock.

“Fiat is ready to take control to bring even greater stability and strength to the relationship in the interests of both,” the executive said from Turin.

The latest deal – expected to be completed in the second quarter of this year – will come as Fiat pays off the loans provided by the US and Canadian treasuries to bail out Chrysler two years ago.

The last 5 percent is now within reach and will be obtained when a model that offers a fuel efficiency of 40 mpg is launched in North America.
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About the author: Mihnea Radu
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Mihnea's favorite cars have already been built, the so-called modern classics from the '80s and '90s. He also loves local car culture from all over the world, so don't be surprised to see him getting excited about weird Japanese imports, low-rider VWs out of Germany, replicas from Russia or LS swaps down in Florida.
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