Fiat has announced an agreement under which its wholly owned subsidiary, Fiat North America, will acquire all of the VEBA Trust’s equity in Chrysler, giving the Italian company total control of the U.S. vehicle maker.
VEBA, known fully as the Voluntary Employees’ Beneficiary Association, is the United Auto Workers Retiree Medical Benefits Trust, an independently administered trust established to pay health care benefits for 117,000 union retirees from Chrysler.
The total cost for Fiat is estimated at $4.35 billion. Chrysler will pay $1.9 billion immediately via a dividend paid to Fiat and VEBA and will pay the trust a further $700 million over the next four years. The Italian company itself is paying a mere $1.75 billion.
The deal reportedly ends a bitter feud between Fiat and the UAW Trust over the value of Chrysler stock and will speeds up the ability of Chrysler and Fiat CEO Sergio Marchionne to fully merge the two global vehicle manufacturers.
Both Fiat and VEBA have also agreed to drop legal proceeding against one another.
The annoucment comes a month after the Ram Commercial Truck division, owned by Chrysler, confirmed that it will offer a new small cargo and passenger van for North America in 2014, a move the organization has hinted at for several years.
The 2015-model ProMaster City will be based on the front-wheel-drive Fiat Doblo van already offered in Europe and elsewhere. The City will compete here with the updated Ford Transit Connect, the new Nissan NV200, and the Chevrolet City Express, the latter a bowtie-badged version of the NV200.