On Tuesday Chrysler Group paid off their government loans from the 2009 automotive industry bailout to the tune of some $7.6 billion. Once the loan was paid back, the shares currently held by the government became available for purchase.
On Wednesday, Fiat announced that it will be purchasing those remaining shares. According to CEO Sergio Marchionne, the Italian automaker has not decided on the timing of the purchase. Marchionne told Italian reporters that the longer the company waits, the more it will have to pay for Chrysler Group’s shares. The report was confirmed on Friday by a Treasury Department official.
At present, the price has not been set. Negotiations have begun, and the price will either be determined by estimates from investment banks or by a set price agreed upon by both parties.
The loan repayment made by Chrysler does not actually cover the sum total given to the American automaker by taxpayers. It leaves the bill about $1.9 billion short. While Fiat’s purchase will make a large dent in that number, it will not pay it off completely.
The same day that Chrysler paid off its bailout loan, Fiat also purchased another 16% of Chrysler’s shares. The purchase brings its stake in Chrysler Group up 46%. Once negotiations are complete and a purchase price is agreed upon, Fiat will own the majority of the shares.