ROME -- Shares in car maker Fiat soared on Thursday on the news it will take full ownership of Chrysler, but Italian union leaders worried what the deal will mean for jobs and investments in the country.
In a New Year's day announcement, Fiat Spa said it could complete its acquisition of Chrysler without having to raise new capital through a rights issue. Investors cheered the details of the deal, bidding the shares up 12 per cent on the Milan exchange. The stock was up by as much as 15.8 per cent earlier in the day.
Fiat said it had reached an agreement with the United Auto Workers union-controlled trust fund holding 41.5 per cent of Chrysler's shares. Fiat already held all the other shares.
Fiat will pay $1.75 billion (about 1.35 billion euros) in cash. Another $1.9 billion (almost 1.5 billion euros) will be paid as extraordinary dividends. The deal is due to close by Jan. 20.
The agreement caps the dream of Sergio Marchionne, Fiat's chief executive and CEO of Chrysler Group, to run a truly global automaker. Marchionne called the deal one of life's "defining moments that go down in the history books."
Italian unions have long worried that Fiat's global reach could come at their expense, in terms of Fiat production in Italy, job security and contract conditions. Their leaders immediately pressed for guarantees, even appealing to the Italian government to help them protect their concerns.
"The agreement reached between Fiat and the Veba (trust) fund heads off the risk of a merger failure, but we contend that the acquisition of the remaining capital shares of Chrysler group was possible thanks to the maximizing of industrial capital and of human capital of the workers of Fiat Group in Italy," said Michele De Palma, in charge of the FIOM metalworkers' union at the automaker.
"In fact, the ownership didn't have to recapitalize to reach 100 per cent of Chrysler," De Palma said in a written statement. "Before celebrating, we contend it is fundamental to understand the deal's terms."
The union leader added that he will ask the premier's office to summon all sides to talks about "the employment and industrial future of the Italian plants, and thus have certainty about the investments for the industrial plan of our country." Italy is mired in recession and plagued by unemployment.
Fiat SpA brought Chrysler out of bankruptcy in 2009.
The Italian company in late October lowered its 2013 earnings targets amid continued weakness in the European economy and car markets and lower sales in Brazil. Without Chrysler, Fiat would have lost significantly more in the third quarter of 2013.
