UAW Wants $342 Million for 3.3% Stake in Chrysler

FiatFiatItaly, 1899 > present159 models
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wants to eventually own all of ChryslerChryslerUnited States of America, 1925 > present70 models
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, but the United Auto Workers labor union is standing in its way. The problem is not a labor dispute; the UAW owns roughly 40% of Chrysler and uses it to pay member medical benefits. 

Fiat's offer for the shares was $139.7 million, but the UAW is asking $342 million for the shares. The UAW says that Fiat's offer is too far below market value and would even be against federal law to sell so low. 

The problem comes because Chrysler's stock is no longer traded publically. As part of the bailout, Fiat is able to buy 3.3% of Chrysler stock every six months up to 16.58%, but after the bailout, it was removed from the stock exchange. Fiat calculated the value of Chrysler stock based on what it was worth when purchased. The UAW and other investors claim that the company's market value has increased since then. 

Further, while Fiat was stronger when it bought Chrysler in 2009, the company as weakened since then, while Chrysler has staged a rapid recovery. Comparing just their third quarter profits, Fiat made $164 million, and Chrysler made $706 million. 

Both sides allowed having a judge decide the case. The court could decide to impose penalties, deadline or force payments. 

Fiat's goal is to eventually buy all of the UAW stock and own all of Chrysler. 

The UAW received its shares from Chrysler to partially remove the company's obligation to pay for employees’ medical insurance after they retired. The union received shares from Ford and GM as well for the same purpose. It increased its shared in Chrysler and GM during the 2009 government bailout instead of cash. 

Source: Automotive News