Fiat CEO Sergio Marchionne has said that it is "possible" that his company will take a controlling stake in Chrysler Group LLC by the end of the year.
Marchionne, who is also CEO of Chrysler, wants to increase Fiat's share of the American automaker to a majority 51 percent. That would ensure Fiat's control of the company before Chrysler once again goes public in an IPO.
"I don't know whether it is likely, but it is possible that we'll go over the 50 percent mark if Chrysler decides to go to the markets in 2011. It will be advantageous if that happens," Marchionne told reporters in Italy on Monday.
But there are obstacles to the deal.
Chrysler will have to first pay back $7.4 billion in government loans from the United States Treasury, the Canadian federal government and the province of Ontario. Either that or the loans will have to be refinanced before Fiat can purchase an increased share in Chrysler. Marchionne hopes to refinance the loans in the first quarter.
Fiat acquired Chrysler at the time of Chrysler's bankruptcy in 2009. It paid no cash for a 20 percent stake in the Detroit automaker in exchange for investments in production. Fiat will be able to raise its stake to 35 percent upon meeting certain conditions, which the automaker is set to do this year. Those conditions include providing Chrysler with a fuel-efficient 4-cylinder engine and a vehicle that makes 40 mpg (5.9l/100km).
Fiat will then have to buy the final 16 percent of Chrysler with cash to raise its stake above the 50 percent mark.
