Fiat agrees deal to increase its ownership in Chrysler to 51 per cent

Fiat is closing in on a majority stake in Chrysler, after agreeing a $1.3bn (£785m) deal to purchase a further 16 per cent of the troubled American car brand.

The Italian manufacturer confirmed this afternoon that it will increase its stake earlier than expected, after meeting pre-arranged targets such as expanding Chrysler’s dealer reach through Latin America.

Fiat presently has 35 per cent of Chrysler shares - but once it pays off US government loans, that figure will be free to rise to 51 per cent.

Fiat boss Sergio Marchionne said, “This is a fundamental step towards completion of the momentous integration of Fiat and Chrysler, initiated less than two years ago, that will result in the creation of a global auto maker.”

Analysts believe that Fiat wants to put Chrysler through an IPO (initial public offering) as soon as it gets majority control. The US brand could have a value of as much as $11 billion (£6.64bn), potentially earning Fiat a capital gain of around 30 per cent on its stake.

But the Fiat plan for Chrysler is far more likely to focus on rebuilding the brand in the potentially lucrative US market than selling any stake in the business.

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