S&C, Skadden and Stroock Advise on Fiat Takeover of Chrysler

Five years after assuming management control of Chrysler Group when it emerged from bankruptcy, Italian automaker Fiat has struck a deal to buy the 41.5 percent stake in the company it did not already own.

Fiat announced last week it has reached an agreement to acquire the final stake in the U.S. automaker for $4.35 billion from the United Automobile Workers (UAW) Retiree Medical Benefits Trust, a Voluntary Employee Beneficiary Association (VEBA) that pays out health care benefits to Chrysler retirees.

The deal ends months of fighting between Fiat and the UAW trust, with the two sides going to court last fall in an effort to determine the value of the trust’s holdings.

The agreement means Fiat and the UAW trust can avoid a trial that—with the two parties consistently billions of dollars apart in their respective valuations of the Chrysler stake—was scheduled to start in September 2014. The deal is also likely to end Chrysler’s planned initial public offering that was expected to raise as much as $1 billion, but had been delayed indefinitely as 2013 wound down and the parties moved closer to resolving their spat.

Under the deal terms, the UAW trust is to receive $3.65 billion in cash up front, with Fiat paying $1.75 billion and Chrysler contributing another $1.9 billion. Chrysler has also agreed to pay four annual installments totaling $700 million after the deal closes, an event that is expected to occur before Jan. 20.

Skadden, Arps, Slate, Meagher & Flom is representing Chrysler’s independent directors. The deal team includes M&A partners Peter Atkins and Eric Cochran, and associates Alexandra McCormack, Juano Queen and Courtney Browne. All are in New York.

Meanwhile, attorneys at Stroock & Stroock & Lavan are serving as outside legal counsel to Brock Fiduciary Services, the financial adviser that has managed the UAW VEBA stake in Chrysler and negotiated the deal for the trust. Stroock’s New York-based team includes M&A of counsel Martin Neidell, benefits and compensation of counsel Mark Wintner, corporate partner Jordan Rosenbaum, tax chair Jeffrey Uffner and associate Danielle Motelow.

Fiat head Sergio Marchionne—who is now CEO of both Fiat and Chrysler—has consistently turned to his regular outside counsel, New York- and Palo Alto-based Sullivan & Cromwell corporate partner Scott Miller, for all matters Chrysler-related. Miller is leading a team advising Fiat on the acquisition that includes tax partners Andrew Solomon and Davis Wang in New York; employee benefits special counsel Rebecca Coccaro in Washington; and associates Jinyoung Joo, Kevin Salinger and James Shea in New York.

Fiat’s top in-house attorney is Roberto Russo.