Fiat to buy remaining shares of Chrysler
ROME – Shares in Fiat soared on Thursday on the news the Italian automaker will take full ownership of Chrysler, but some Italian unions worried what the deal will mean for jobs and investments in the country.
In a New Year’s Day announcement, Fiat SpA said it could complete its acquisition of Chrysler without having to raise new capital through a rights issue. Investors cheered the fact, bidding the shares up 12 percent on the Milan exchange. The stock was up by as much as 15.8 percent earlier in the day.
Fiat will buy a 41.5 percent stake held by a United Auto Workers union trust fund for $1.75 billion in cash and another $1.9 billion in extraordinary dividends. The deal is due to close by Jan. 20.
The agreement caps the dream of Sergio Marchionne, Fiat’s chief executive and CEO of Chrysler Group, to run a truly global automaker. Marchionne called the deal one of life’s “defining moments that go down in the history books.”
The move was greeted in Italy, where Fiat is the largest private employer, with a mixture of anxiety and excitement.
Italian unions have long fretted that the global reach of Fiat could come at their expense in terms of production, job security and contract conditions. Their leaders immediately pressed for guarantees, appealing to the government to help safeguard their concerns.
“It is indispensable that Fiat say what it intends to do in our country,” Susanna Camusso, leader of the nationwide, left-leaning CGIL labor confederation, said in a statement.
Fiat has a total of 215,000 employees, almost a third of whom are in Italy.
While praising the deal as important for Fiat to keep up with rivals, Camusso insisted that the company’s “strategic direction and planning remain Italian” and that it “keep a significant presence in Italy.”
Allied with CGIL is the FIOM metalworkers union, which has a reputation as a hardliner in labor negotiations.
“We contend that the acquisition of the remaining capital shares of Chrysler group was possible thanks to the maximizing of industrial capital and of human capital of the workers of Fiat Group in Italy,” said Michele De Palma, in charge of FIOM at the automaker.
“Before celebrating, we contend it is fundamental to understand the deal’s terms,” De Palma said in a written statement.
The union leader said he will ask the premier’s office to summon all sides to talks about the future of the Italian plants. The government is struggling to revive the economy, which is mired in recession and plagued by unemployment.
More centrist-leaning unions were optimistic about the deal’s possible benefits for Italian workers.
“It is good news for Fiat workers, for the auto industry and for our country,” said Giuseppe Farina, leader of the FIM-CISL union.
Business economics professor Cesare Pozzi said “there is a lot of fear” over the Chrysler deal because of Fiat’s importance as an employer, and if the deal doesn’t bring the success Marchionne envisions, Italian workers could pay the price.
Still, said Pozzi, who teaches at LUISS, a private university in Rome, “this time it could be an opportunity.”