Italy: Fiat stocks soared as much as 16% before the close of trading

Fiat stocks soared as much as 16% before the close of trading Thursday, a day next the Italian automaker announced it had gained full control of American carmaker Chrysler in a $4.35-billion transaction, raising questions at home about the next of production for Italy's biggest private corporation. The transaction was made final next additional than a year of negotiations with VEBA, a healthcare trust associated with the United Auto Workers union, to acquire the remaining 41.46% share of Chrysler.

In exchange, Fiat and Chrysler will pay out $3.65 billion in cash to VEBA, sharing the cost, while Chrysler has agreed to pay it over the next three years an additional $700 million starting once the transaction closes.

The transaction, which is expected to be finalized January 20, is part of a plan by CEO Sergio Marchionne to merge Fiat and Chrysler into the world's seventh-major auto group.

While Chrysler has been largely profitable as of late, Fiat has not, compacting risks surrounding its sizable deficit, which analysts expect will rise to around 10 billion euros following the transaction, making it the majority indebted automobile manufacturer in Europe. Marchionne is counting on sales in the North American market, where those of Chrysler have risen 50% since 2009, to compensate for losses in Fiat's European market. Fiat announced last month only 55,600 vehicle registrations in Europe in November, down 5.8% over the same month last year.

Total European market share was 5.7%, down 0.4% compared to November 2012.

Fiat Group reported that continuing sales contraction in its home market of Italy heavily penalized the results.

Unit sales in Italy fell by 4.5% in November compared to the previous year.

On the world scale, Fiat registered a total of additional than 688,600 vehicles in the initial eleven months of the year, slipping 0.3% from the same period last year.

The new transaction has raised hopes in Italy that Fiat factories will be used to produce planned new models of Alfa Romeos and Jeeps for export to growing markets in North America, Latin America and Asia. In the US, the Fiat brand has performed better than expected since it took control of Chrysler in 2009, opening the door to exporting popular models there such as the Fiat 500, a sporty remake of the classic coupe. According to Fiat brand chief Olivier Francois the Fiat brand has gobbled up additional than a 60% share of its segment and 25% sales increase in California alone, where 4,000 orders had been racked up for Fiat's new electric vehicles.

Francois said Fiat was still small compared to the "great American brands", but that the company sees the US as a large "gym" in which to reposition the brand as "premium" and "cool".

Meanwhile labor unions wanted to know how the Fiat-Chrysler transaction would pay off for Italy and its autoworkers, who have seen their numbers dwindle in the face of outsourcing and the world financial crisis. "From presently on significant step that clarifies the ownership structure, it is indispensable for Fiat to tell us what it intends to do in our country," said Susanna Camusso, chief of Italy's major labor confederation CGIL. Camusso went on to request Fiat explain how it plans to integrate Italian production facilities into the newly formed entity that would arise from the complete purchase of Chrysler. She added that she hoped that company management, inclunding company strategy and divisions, remained Italian.