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Media hail Fiat-Chrysler 'victory', say more work to be done

Integration, investment and debt repayment among challenges

03 January, 12:38
Media hail Fiat-Chrysler 'victory', say more work to be done (ANSA) - Turin, January 3 - Fiat Group CEO Sergio Marchionne won a "decisive victory" with his New Year's Day deal to buy the remaining stake in American automaker Chrysler but he still has "significant work to do", the Wall Street Journal wrote Thursday. On Wednesday Fiat announced it had gained full control of Chrysler in a $4.35-billion deal after more than a year of negotiations with United Autoworkers (UAW) healthcare trust VEBA to acquire its 41.46% share. Under the deal, Fiat and Chrysler will pay out $3.65 billion in cash to VEBA, sharing the cost, while Chrysler has agreed to paying the trust an additional $700 million over the next three years.

"Now, the deal-master must prove he can forge two weak auto makers into one strong global player," the New York-based business paper said. This will involve considerable effort in the areas of integration, global presence and investment, the source added. The Financial Times said the deal "clears a big bump on Fiat-Chrysler's road" but added that an equity boost to fund the deal - a prospect so far ruled out by Marchionne - "is not expected to be definitive". "A funding boost could help the group shrug off long standing doubts about its firepower for research and development" and also pay down some of its 10 billion euro net combined debt, the paper wrote.

Banking sources told the paper Marchionne was considering a mix of a mandatory and straight convertible bonds of less than 1.5 billion euros after the merger.