Publications
Partners
Shares in Fiat soared due to the news that 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 January 2014, Fiat 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% on the Milan exchange. The stock was up by as much as 15.8% earlier in the day.
R38-BILLION DEAL
Fiat will buy a 41.5% held by a United Auto Workers union trust fund for R38-billion (R18-billion in cash and another R20-billion in extraordinary dividends). The deal is due to close by January 20 2014.
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.
Susanna Camusso, leader of the CGIL labour confederation, said in a statement: "It is indispensable that Fiat say what it intends to do in our country."
Fiat has 215 000 employees, almost a third of which are in Italy.
TERMS AND CONDITIONS
While praising the deal as important for Fiat to keep up with rivals, Camusso insisted that the automaker's "strategic direction and planning remain Italian" and that it "keep a significant presence in Italy."
Allied with CGIL is the FIOM metalworker's union, which has a reputation as a hardliner in labor negotiations.
Michele De Palma, in charge of FIOM at the automaker said: "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."
"Before celebrating, we contend it is fundamental to understand the deal's terms."
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.
'GOOD NEWS FOR OUR COUNTRY'
Giusppe Farina, leader of the FIM-CISL union, said: "It is good news for Fiat workers, for the auto industry and for our country."
Fiat brought Chrysler out of bankruptcy in 2009.
It has struggled recently with sales of its own cars. In October, it lowered its 2013 earnings targets amid continued weakness in the European economy and car markets and lower sales in Brazil. Without Chrysler, Fiat would have lost significantly more in the third quarter of 2013.
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."
In January 2014, Fiat 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% on the Milan exchange. The stock was up by as much as 15.8% earlier in the day.
R38-BILLION DEAL
Fiat will buy a 41.5% held by a United Auto Workers union trust fund for R38-billion (R18-billion in cash and another R20-billion in extraordinary dividends). The deal is due to close by January 20 2014.
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.
Susanna Camusso, leader of the CGIL labour confederation, said in a statement: "It is indispensable that Fiat say what it intends to do in our country."
Fiat has 215 000 employees, almost a third of which are in Italy.
TERMS AND CONDITIONS
While praising the deal as important for Fiat to keep up with rivals, Camusso insisted that the automaker's "strategic direction and planning remain Italian" and that it "keep a significant presence in Italy."
Allied with CGIL is the FIOM metalworker's union, which has a reputation as a hardliner in labor negotiations.
Michele De Palma, in charge of FIOM at the automaker said: "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."
"Before celebrating, we contend it is fundamental to understand the deal's terms."
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.
'GOOD NEWS FOR OUR COUNTRY'
Giusppe Farina, leader of the FIM-CISL union, said: "It is good news for Fiat workers, for the auto industry and for our country."
Fiat brought Chrysler out of bankruptcy in 2009.
It has struggled recently with sales of its own cars. In October, it lowered its 2013 earnings targets amid continued weakness in the European economy and car markets and lower sales in Brazil. Without Chrysler, Fiat would have lost significantly more in the third quarter of 2013.
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."
