The U.S. Supreme Court has finally cleared the way for the government-backed sale of Chrysler LLC to the Fiat Group. The Supreme Court rejected arguments from three Indiana pension funds and other opponents of the transaction to delay the deal while the American automaker also won a court permission to eliminate a total of 789 dealers across the country that lost their franchise agreements overnight as part of the company's downsizing plan. The new alliance will see the Fiat Group owning a 20 percent stake in Chrysler LLC which will be renamed to 'Chrysler Group LLC', while the U.S. Treasury and the Canadian Government have been issued an equity interest equal to 8 percent and 2 percent "on a fully diluted basis", respectively.
Under the agreement, Fiat's stake in the Chrysler Group LLC will increase in increments by up to a total of 35 percent but the Italian automaker cannot obtain a majority stake in the company until all taxpayer funds have been repaid.
"This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole," said Sergio Marchionne, who today was named Chief Executive Officer of Chrysler Group LLC.
Aside from Marchionne, who is also Chief Executive Officer of Fiat S.p.A., the new Chrysler will be managed by a nine-member Board of Directors, consisting of three directors to be appointed by Fiat, four directors to be appointed by the U.S. Government, one director to be appointed by the Canadian Government and one director to be appointed by the United Auto Workers' Retiree Medical Benefits Trust.
In a joint statement, the two companies said that the Board is expected to name C. Robert Kidder as Chairman.
"We intend to build on Chrysler's culture of innovation and Fiat's complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas," said Marchione. "Those Chrysler operations assumed by the new company that were idled during this process will soon be back up and running, and work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward."
"This has, I know, been a difficult process for everyone involved, but we are ready to prove to the American consumer that Chrysler can once again be a strong, competitive company that produces a full portfolio of reliable vehicles that capture the imagination and inspire loyalty," Marchionne added.
The new alliance between Fiat and Chrysler creates the sixth largest carmaker in the world with combines sales of around 4.5 million vehicles globally based on 2008 results.
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