Fiat Buys Chrysler Completely, Uses Chrysler’s Money to Pay for It
Sergio Marchionne really knows the value of the Chrysler Group. He also really knows how to get what he wants. That’s why he now owns the Chrysler brand—and used Chrysler’s assets to pay for it.
That’s right—Fiat/Chrysler CEO Sergio Marchionne just bought the remaining 41.5 percent of the Chrysler brand last week. And how much did he throw down for the remainder of the highly successful automaker from the United Auto Workers retiree health trust? Just $4.35 billion.
So including what Fiat already spent on Chrysler, the grand total comes out to about $6.3 billion. Sounds like a lot of cash, right? Wrong. Back in 1998, Daimler-Benz forked over $37 billion for Chrysler, according to a USA Today report. Given Chrysler’s increasing value and the inflation of the dollar bill, Chrysler is worth even more now than what Daimler paid then. (Although, 80 percent of the brand was bought from Daimler in ’07 for just $7.4 billion.)
So how exactly did Mr. Marchionne cough up the $4.35 billion? Well, among several assets obtained from the purchase is $12 billion cash. So instead of borrowing the money, Marchionne just used some of that to pay for Chrysler. Confused? Yeah, we are too.
Either way, this could mean promising things for Chrysler. Both Fiat and Chrysler, while small, are successful on their own. Now that they are sharing resources, they may be unstoppable.