The Canadian government’s 1.7-percent stake in Chrysler, acquired two years ago in exchange for the $1.7 billion loaned to help bail out the company, may soon be owned by Fiat. According to The Detroit News, Fiat and Chrysler CEO Sergio Marchionne is open to the idea, and has apparently entered discussions with Canadian finance minister Jim Flaherty over the matter.
Marchionne joined Flaherty to announce the repayment of Chrysler’s government loans at a Chrysler Canada casting plant in Toronto on Monday, but apparently discussions on purchasing Canada’s stake arose shortly afterward. For now, Flaherty says that the Canadian government will wait and see how the U.S. stock transfers go before making a decision to sell. Unlike the U.S. government, which established criteria for Chrysler’s owners to eventually take control of its shares of the company, the Canadian government has no obligation to sell it’s portion of Chrysler, even to Fiat. Even though Fiat can’t compel Canada to sell, the company’s early repayment of U.S. and Canadian government loans might help convince the country that the company is in good hands.
By paying off Chrysler’s debt in full last week, Fiat only needs to wait until it meets the government’s last criteria before taking ownership of its final piece of Chrysler, which would give it the 50-percent stake it needs to take control of the company. Although comparatively small, buying Canada’s 1.7-percent stake would likely increase Fiat’s influence over Chrysler, which has already seen changes thanks to its new management.
Source: Detroit News