Willkie Advises Fiat in Agreement to Acquire the U.S. Government’s Remaining Chrysler Stake

June 6, 2011

Latest transaction will give Fiat majority control of Chrysler’s privately held shares and mark the end of the U.S. government’s ownership stake in the U.S. automaker.

On June 3, Willkie client Fiat S.p.A. and the United States Department of Treasury announced that the Treasury will sell its remaining 6 percent interest in Chrysler Group LLP to a Fiat subsidiary for $500 million. Fiat will also pay an additional $60 million for the U.S. government’s rights to acquire Chrysler shares that are currently owned by a union-managed healthcare trust, and $15 million to the Canadian government for its rights to purchase union shares. Upon consummation, this transaction will result in the end of the U.S. government’s ownership stake in Chrysler. Upon announcement of the transaction, President Obama addressed a Chrysler plant in Toldeo, Ohio, touting the comeback of the U.S. auto industry.

Willkie also advised Fiat in its $1.27 billion agreement, announced in April, to acquire an additional 16 percent stake in Chrysler, which raised its ownership in the U.S. automaker from 30 to 46 percent on a fully diluted basis. (Fiat acquired its initial stake in Chrysler upon Chrysler’s emergence from bankruptcy in 2009.) That deal closed last week and Chrysler announced the refinancing and repayment of $7.6 billion in outstanding government loans, six years ahead of schedule.

The latest deal, which gives Fiat majority control of Chrysler’s privately held shares, was handled by partner Robert Stebbins and associates Michael Brandt and Delano Ladd.