Chrysler Group LLC and Fiat Finalise Global Strategic Alliance
Sergio Marchionne (left)|
and C. Robert Kidder (right)
11th June, 2009
- C. Robert Kidder to be named Chairman of U.S. Automaker
- Sergio Marchionne to Serve as Chief Executive Officer
Chrysler Group LLC and Fiat Group have announced that they have finalised their previously announced
global strategic alliance, forming a “new" Chrysler (the third time a new Chrysler has been formed) that has
the resources, technology and worldwide distribution network required to compete effectively on a global
scale. The new Chrysler will begin operations immediately.
As part of the alliance, Fiat will contribute to Chrysler its technology, platforms and powertrains for
small- and medium-sized cars, allowing the company to offer an expanded product line including
environmentally friendly vehicles increasingly in demand by consumers. Chrysler will also benefit from Fiat’s
management expertise in business turnaround and access to Fiat’s international distribution network with
particular focus on South America and Russia.
“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 was named Chief Executive Officer of Chrysler Group LLC. “From
the very beginning, we have been adamant that this alliance must be a constructive and important step towards
solving the problems impacting our industry. We now look forward to establishing a new paradigm for how
automotive companies can operate profitably going forward."
Mr. Marchionne continued: "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. 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."
“The same attributes that first attracted us to this alliance – a global automotive company with
first-class technology, a devoted workforce, improved efficiency, a strong, global distribution network and
an unyielding passion for building great cars that consumers want – are even more true today. While it does
not solve every issue faced by the automotive industry today, this alliance, established with the full
support of President Obama's Administration, is a very significant step toward positioning Fiat and Chrysler
to be leaders among the next breed of global auto makers. 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,” Mr. Marchionne said.
Under the terms approved by the U.S. Bankruptcy Court in New York and various regulatory and anti-trust
regulators, the company formerly known as Chrysler LLC formally sold substantially all of its assets, without
certain debts and liabilities, to a new company that will operate as Chrysler Group LLC.
Chrysler Group in turn issued to a subsidiary of Fiat a 20 per cent equity interest on a fully diluted basis
in the new company. Fiat has also entered into a series of agreements necessary to transfer certain technology,
platforms and powertrains to the new Chrysler. Fiat’s equity interest will increase in increments by up to a
total of 35 per cent in the event that certain milestones mandated by the agreement are achieved, but Fiat
cannot obtain a majority stake in Chrysler until all taxpayer funds are repaid.
Similarly, the United Auto Workers’ Retiree Medical Benefits Trust, a voluntary employees’ beneficiary
association trust (VEBA) has been issued an equity interest in Chrysler Group equal to 55 per cent on a fully
diluted basis. The U.S. Treasury and the Canadian Government have been issued an equity interest equal to 8 per
cent and 2 per cent on a fully diluted basis, respectively. These interests reflect the anticipated share
dilution as a result of Fiat’s incremental equity assumption once the milestones outlined in the strategic
alliance agreement are achieved.
In addition to Mr. Marchionne, currently the Chief Executive Officer of Fiat S.p.A. serving as CEO, 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. The
Board is expected to name C. Robert Kidder as Chairman. The process of determining additional board members is
continuing and updates will be announced as appropriate.
Founded in 1899, Fiat is an automotive-focused industrial group, serving customers in more than 190 countries
around the world. With some 185,000 employees, 114 R&D centres and 178 plants worldwide, the Fiat Group
designs, manufactures and sells passenger cars (Fiat, Lancia, Alfa Romeo, Maserati and Ferrari), agricultural and
construction equipment (CNH Case New Holland), trucks and industrial vehicles (Iveco), and automotive components
(FPT Powertrain Technologies, Magneti Marelli and Teksid).