Fiat ups Chrysler stake by 5 percent in move towards merger

DETROIT ― Italy’s Fiat SpA has raised its stake in Chrysler Group LLC by 5 percent to 58.5 percent, meeting a final target set by the U.S. government as the two groups move closer to creating one of the world’s leading auto makers.

Fiat has managed Chrysler since a 2009 bailout deal with the U.S. government. It has paid a total of around $2 billion for its majority stake and agreed a number of conditions to be met before a full merger could take place.

Sergio Marchionne, CEO of both groups, has made Fiat one of Europe’s top turnaround stories and wants to elevate the company to a global player through Chrysler.

“The acquisition of a further 5 percent of Chrysler is a fundamental step in completion of the integration between our two groups,” Marchionne said in a statement on Thursday.

Chrysler and Fiat said they had formally committed to the U.S. Treasury Department to produce the 2013 Dodge Dart sedan at a Chrysler plant in Illinois, the last performance event of three agreed with Washington in 2009.

That commitment, along with proving late last month to the U.S. Environmental Protection Agency that the new Dart can achieve an unadjusted combined fuel economy of 40 miles per gallon, triggered the 5 percent ownership increase. The group had said it would reach the target by the end of 2011.

“There was no real new element today, they have jumped the first, the second and now the third fence,” a Paris-based analyst said.

The remaining 41.5 percent ownership of Chrysler remains with a healthcare trust, called VEBA, affiliated to the United Auto Workers union.

Marchionne told Reuters in December it was possible Chrysler would have an initial public stock offering in 2013 as the UAW seeks to cash out or reduce its shareholdings.