Union health trust demands Fiat pay $342 million for Chrysler stake
Italian automaker Fiat must more than double its offer for a 3.3 percent stake in automaker Chrysler Group LLC that is held by a union-related trust, the trust claimed in a countersuit filed on Monday.
Fiat's offer of $139.7 million is "substantially below fair market value," the United Auto Workers-affiliated trust said in documents filed in Delaware's Court of Chancery.
Fiat must pay at least $342 million for the stake, the UAW trust said in its response, which came nearly two months after Fiat sued the trust for failing to sell the shares.
"Sale of the called shares at the price calculated by Fiat would constitute a transaction prohibited by applicable federal law," the UAW Retiree Medical Benefits Trust said.
The lawsuit was the latest twist in a long-running dispute over the value of Chrysler between the UAW trust and Sergio Marchionne, the chief executive of Chrysler and Fiat.
Marchionne is looking to buy the trust's entire 41.5 percent stake in Chrysler, cementing Fiat's ownership of the company and allowing the automakers to eventually merge.
The trust said it has a duty to maximize the value of its Chrysler stake to cover rising healthcare costs for the automaker's retirees.
One point of contention is whether Chrysler's value would be determined in relation to Fiat or Fiat's parent.
Fiat claimed that a clerical error in the agreement linked Chrysler's value to Fiat's North American unit, even though the parties intended it to be the parent. The UAW trust disagreed.
The trust, which is known as a VEBA or voluntary employees beneficiary association, was created in 2007 to let General Motors Co , Ford Motor Co and Chrysler shed their obligation to pay lifetime medical benefits for their UAW retirees.
In 2009, when GM and Chrysler underwent government-funded bankruptcy restructurings, the UAW VEBA took stakes in the companies instead of the promised cash payments.
As part of the bankruptcy agreement, Fiat is able to exercise call options to buy portions of the stake held by the healthcare trust, which manages benefits for 824,000 retirees from GM, Ford and Chrysler.
Fiat and the UAW trust declined to comment on the countersuit, which was brought by Brock Fiduciary, which manages the Chrysler stake.
(Reporting by Tom Hals in Wilmington, Delaware and by Deepa Seetharaman in Detroit; Additional reporting by Lisa Jucca in Milan; Editing by Kenneth Barry)