Fiat shares jump after deal to buy rest of Chrysler, but unions worry about jobs in Italy
ROME - Shares in Fiat soared on Thursday on the news the Italian automaker will take full ownership of Chrysler, but some Italian unions 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 fact, 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 will buy a 41.5 per cent stake held by a United Auto Workers union trust fund for $1.75 billion (about 1.35 billion euros) in cash and another $1.9 billion in 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."
The move was greeted in Italy, where Fiat is the largest private employer, with a mixture of anxiety and excitement.
Italian unions have long fretted that the global reach of Fiat could come at their expense in terms of production, job security and contract conditions. Their leaders immediately pressed for guarantees, appealing to the government to help safeguard their concerns.
"It is indispensable that Fiat say what it intends to do in our country," Susanna Camusso, leader of the nationwide, left-leaning CGIL labour confederation, said in a statement.
Fiat has a total of 215,000 employees, almost a third of which are in Italy.
While praising the deal as important for Fiat to keep up with rivals, Camusso insisted that the company's "strategic direction and planning remain Italian" and that it "keep a significant presence in Italy."
Allied with CGIL is the FIOM metalworker's union, which has a reputation as a hardliner in labour negotiations.
"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 FIOM at the automaker.
"Before celebrating, we contend it is fundamental to understand the deal's terms," De Palma said in a written statement.
The union leader said he will ask the premier's office to summon all sides to talks about the future of the Italian plants. The government is struggling to revive the economy, which is mired in recession and plagued by unemployment.
More centrist-leaning unions were optimistic about the deal's possible benefits for Italian workers.
"It is good news for Fiat workers, for the auto industry and for our country," said Giusppe Farina, leader of the FIM-CISL union.
Fiat brought Chrysler out of bankruptcy in 2009.
But it has struggled recently with sales of its own cars. In October, it 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.
Business economics professor Cesare Pozzi said "there is a lot of fear" over the Chrysler deal because of Fiat's importance as an employer, and if the deal doesn't bring the success Marchionne envisions, Italian workers could pay the price.
Still, said Pozzi, who teaches at LUISS, a private university in Rome, "this time it could be an opportunity."
Trisha Thomas contributed to this report.
Read more Business News
- ATV to 'Slingshot' into productionKelowna - 6:52 pm
- Vernon millionaires can finally sleepVernon / N. Okanagan - 3:01 pm
- Kamloops retiree living a dreamKamloops - 4:29 pm
- Armed robberiesKelowna - 4:38 pm
|QHR Technologies Inc||1.24||+0.05|
|Anavex Life Sciences||0.47||-0.07|
|Copper Mountain Mining||2.03||-0.11|
|Sunrise Resources Ltd||0.035||+0.005|
|Mission Ready Services||0.29||+0.015|
How will you pay for this today? Maybe it’s time to change the way you answer this common checkout question.With more payment options than ever, consumers can find easy ways to save money, simpl...
In the razzle dazzle of Hollywood it is hard to find anyone who stands out from the crowd. The fraternity of Actors, Producers, Directors and various other technical guru’s seem to live in a wo...
This past Sunday I drove from Kelowna to Powell River. For those of you who’ve never had to, particularly in winter, it means rising in the wee hours; managing a treacherous journey on the Coqui...