Italian carmaker Fiat SpA closed its takeover of Chrysler on Wednesday, sealing the deal on Fiat's ambitious move to create a growing global player following one of the worst crises in the auto industry's history.
Chrysler, Jeep and Dodge vehicles are parked
in a lot next to the idle Chrysler Belvidere
Assemblyplant Belvidere, Illinois, May 4, 2009.
(REUTERS / Frank Polich)
In a victory for the U.S. administration driving the restructuring of bankrupt Chrysler, the Supreme Court on Tuesday denied a request from Indiana pension funds to delay the sale.
Fiat Chief Executive Sergio Marchionne will become CEO of Chrysler. The automaker's former CEO, Bob Nardelli, will leave the company and return to Cerberus Capital, its former majority owner.
Chrysler's former vice chairman and president, Jim Press, will become Marchionne's deputy chief executive, and Fiat's chief financial officer, Richard Palmer, will become CFO of the new company.
In a memo to employees, Marchionne voiced optimism about the new company's outlook.
There is no doubt in my mind that we will get the job done, he said. He called the alliance a bold first step to implement lessons learned.
He added that Fiat will begin the process of transferring Fiat's technology, platforms and powertrains to Chrysler plants in the next few months.
Fiat is joined by a union-aligned trust and the U.S. and Canadian governments in taking over the best parts of Chrysler.
Fiat shares were up 4.85 percent at 7.79 euros following news that the U.S. Supreme Court had removed the final obstacle to the deal on Tuesday.
Fiat began looking for partners to gain scale late last year when the auto crisis intensified, leading to a dramatic drop in car sales.
CSM Worldwide, an industry consultancy, has forecast a 20 percent drop in global production to 52 million vehicles this year as carmakers lay off workers and leave their factories idle in the face of a sharp drop in demand.
Others in the industry do not feel the urgency to look for partners. Renault-Nissan Chief Executive Carlos Ghosn, for example, said on Wednesday his group had no problem with scale.
In Fiat's case, CSM Worldwide said it saw a tremendous amount of risk in trying to revive Chrysler.
Not only did it have to renew an aging product line but also persuade former customers to buy a Chrysler again.
Fiat has sent a team of executives and engineers to Detroit to work with Chrysler to cut costs and prepare for the U.S. launch of the Cinquecento (500), Fiat's popular small car.
Its stake in Chrysler will start at 20 percent and should rise to 35 percent over time.
Fiat has had a harder time of persuading German auto and government officials of its plans to create a world giant in car industry.
It lost out to Canadian car parts maker Magna International for General Motors Corp's Opel unit although the government invited it to improve its bid.
The sale is part of GM's restructuring, which caused it to file for Chapter 11 bankruptcy protection on June 1 after Chrysler did the same on April 30.
Erich Merkle, an independent auto analyst based in Grand Rapids, Michigan, said the court's decision on Chrysler was good news for GM because it was using a similar quick-sale strategy to facilitate its way through bankruptcy.