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Italian auto maker Fiat SpA officially became Chrysler Group LLC's majority owner on Thursday, clearing the way for a complete restructuring of Chrysler's board of directors and a further merger of the two companies' management.
Fiat on Thursday reached a deal to pay the Canadian government $140 million for its small stake in Chrysler, and completed a previously announced deal to purchase the U.S. government's larger stake in the auto maker. The two moves increased Fiat's holding in Chrysler to 53.5% from 46%.
Sergio Marchionne, who serves as chief executive of Fiat
and Chrysler, is likely to move quickly to reorganize Chrysler's board and replace its five directors who were appointed by the two governments. The government appointees include Chairman C. Robert Kidder, Douglas Steenland, Robert Thompson and Scott Stuart, each appointed by the U.S,and George F.J. Gosbee, who represents Canada's interests.
Chrysler's current nine-member board was appointed after the auto maker exited bankruptcy in 2009 by the stakeholders in the company which included Fiat, the U.S. and Canadian governments and the United Auto Workers retiree health-care trust fund.
A Chrysler spokesman declined to comment.
Separately, Mr. Marchionne has already begun picking executives who will serve on a single management team as part of a bid to merge the two companies into a single, global auto maker. Currently, each auto maker has its own executive team that reports directly to Mr. Marchionne.
Details of the new management structure are likely to be outlined during Chrysler's quarterly conference call on Tuesday. Fiat has said it will consolidate Chrysler's earnings into its own finances and will report those when it releases results.
Canadian Finance Minister Jim Flaherty said the governments of Canada and Ontario will receive a total of $140 million, including $125 million for their combined 1.6% interests in Chrysler, and an additional $15 million as a portion of proceeds arising from the assignment to Fiat of a share-agreement between the U.S. Treasury and the UAW trust.
Ontario will get one-third of the proceeds. Provincial Finance Minister Dwight Duncan said the province will use the funds for deficit reduction.
The U.S. Treasury said Fiat paid $500 million for its 98,461 shares, or 6% fully diluted equity interest. The company also paid an additional $60 million for Treasury's rights to purchase the shares owned by the United Auto Workers health care trust fund. The stake sale was announced earlier this year.
The UAW retiree trust fund is the only remaining shareholder with a 44.7% stake or 41.5% on
a fully diluted basis. Mr. Marchionne has talked about working a deal to buy the fund's shares, eliminating a need to take Chrysler public
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