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Italy’s Fiat to Boost Stake in Chrysler

It's buying the additional stake from the union health care trust


With Chrysler having a banner year, it’s probably not surprising that its majority owner, Italy’s Fiat (PINK:FIATY), is pleased. So pleased, in fact, that the company is willing to increase its stake in the third-largest U.S. automaker.

Fiat says it plans to exercise an option to acquire an additional 3.3% of Chrysler, boosting its total stake from 58.5% to 61.8%, Reuters noted.

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The Italian carmaker will buy these shares from the Voluntary Employees Beneficiary Association (VEBA), the union health trust that owns the rest of Chrysler. An unnamed analyst cited by Reuters estimated the value of the transaction at around $252 million.

Under terms of its original investment in Chrysler, Fiat has the option to acquire up to 40% of VEBA’s stake.

Chrysler recently announced that it would hire more workers at its manufacturing facilities producing Jeep Wranglers and Grand Cherokees. In fact, Jeep Wrangler sales rose 34% in the first five months of this year, compared to 2011, hitting a monthly record in May.

Article printed from InvestorPlace Media,

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