Rep Power: 497

Fiat SpA expanded its controlling stake in Chrysler Group LLC, meeting the final target set by the U.S. government in the deal that rescued the U.S. carmaker from bankruptcy and taking a step toward a planned merger.

Fiat’s holding increased to 58.5 percent from 53.5 percent after the carmakers committed to produce a fuel-saving model in the U.S., the companies said today. Fiat ended up paying about $2 billion for the holding in the third-largest U.S. automaker.

The higher stake “represents repayment of the trust placed in Fiat to introduce its fuel-efficient cars and engines to the U.S. market,” Sergio Marchionne, chief executive officer of Chrysler and Turin, Italy-based Fiat, said in a statement. “The acquisition of a further 5 percent of Chrysler is a fundamental step in completion of the integration between our two groups.”

Marchionne plans to merge the two carmakers by the end of 2014 to reduce costs and achieve a target of more than 100 billion euros ($129 billion) in revenue as he struggles to end Fiat’s European losses, which analysts estimate at 800 million euros a year. Achieving the final target completes the reorganization plan set up by President Barack Obama in 2009.

Read more: http://www.businessweek.com/news/201...rd-merger.html