Italian carmaker Fiat SpA (BIT:F) on Tuesday announced plans to exercise an option to acquire an initial tranche of 3.3% in Chrysler Group LLC from the the VEBA employee trust fund and raise its total stake in the majority-owned US unit to 61.8%.
Under a call option agreement from June 2009, Fiat can buy 40% of VEBA’s stake in Chrysler in semi annual tranches with the option to be exercised during the period from 1 July 2012 to 30 June 2016, it said.
The price Fiat will pay for the initial tranche will be calculated based on factors settled by the parties in their agreement, Fiat said.
The Italian group expects to complete the deal in the next few weeks.
Fiat bought an initial 20% stake in Chrysler in 2009 under an agreement with the US government and raised that interest to 58.5% in January after achieving the last of the three performance targets stipulated in the agreement.
According to the terms of Chrysler’s bailout in 2009, the US treasury allowed the Italian company to take the stake and management control at the US automaker with an option to increase its interest to a majority position based on various tests and options. Fiat reached majority ownership at Chrysler last year.
UAW VEBA, a trust of auto workers, holds over 41% in the US carmaker.