Fiat buys U.S., Canada shares in Chrysler to own majority

Chrysler, with its logo on its headquarters in Auburn Hills, Mich., is out of government ownership.

DETROIT -- Italy's Fiat SpA bought the United States and Canadian governments' stakes in Chrysler Group LLC, becoming the majority shareholder in the U.S. automaker with the ability to appoint more board members.

Fiat now has 53.5 percent of Chrysler on a fully diluted basis, up from 46 percent, Auburn Hills, Mich.-based Chrysler said in a regulatory filing Thursday. As a result, the U.S. government no longer owns a piece of Chrysler.

Fiat is on track to hold 58.5 percent of Chrysler by the end of the year. A health care trust affiliated with the United Auto Workers and known as the VEBA holds the other shares.

With majority ownership, Fiat now has the right to appoint a majority of the company's nine-member board. Sergio Marchionne, the chief executive of both automakers, is selecting managers.

Fiat said in early June that it would buy the U.S. and Canadian governments' stakes in Chrysler.

Fiat paid the United States $500 million and Canada $125 million for their stakes. The company also paid $75 million for the Treasury's option to buy shares held by the UAW retiree trust. Treasury got $60 million of that, while Canada got $15 million.

"With today's closing, the U.S. government has exited its investment in Chrysler at least six years earlier than expected," Assistant Secretary for Financial Stability Tim Massad said.

Canada said it would remit one-third of its proceeds to the Ontario government.

The United States and Canada took equity positions in Chrysler during the U.S. automaker's bankruptcy restructuring in 2009. Fiat received a 20 percent stake. As part of the 2009 bankruptcy deal, Fiat received the option to boost its stake by 5 percent each time Chrysler met a performance target.

Chrysler is expected to meet the final test by the end of 2011, which would allow Fiat's stake to go up by 5 percent. The test is the development of a Fiat-based car that can get 40 miles per gallon.

In the crisis, the U.S. Treasury loaned Chrysler $12.5 billion. In bankruptcy, it was split into the old Chrysler and the new Chrysler.

In May, the new Chrysler fully repaid its bailout loans. But the United States is likely to lose $1.3 billion it had lent to the old Chrysler, Treasury said. Canada appears set to lose about $842 million.