Chrysler and Fiat make it official

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Automaker sells itself to new owners, including Italian automaker, the UAW and the U.S. and Canadian governments.

NEW YORK (CNNMoney.com) -- Chrysler and Italian automaker Fiat on Wednesday officially signed a strategic alliance brokered by the U.S. government, after the Supreme Court cleared the path for the deal late Tuesday. Fiat will initially take a 20% stake in the company, which can go up to 35% if it reaches certain goals. "This is a very significant day ... for the global automotive industry as a whole," said Sergio Marchionne, Fiat's chief executive who was named the CEO of Chrysler on Wednesday. "From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry."

The deal formed a new company, called Chrysler Group LLC, after the former Chrysler LLC sold nearly all of its assets -- except for some debts and liabilities -- to the new firm. Chrysler Group is mostly owned by the United Auto Workers union (a 55% stake) and will give minority stakes to governments: 8% for the United States and 2% for Canada. Fiat will not be allowed to take a majority stake until the new Chrysler pays back the $15.5 billion lent to it from the Treasury Department. Chrysler's new board will consist of three Fiat directors, four representing the U.S. government, one from the UAW and one from the Canadian government. The company said it expects to name former Borden Chemical and Duracell chief executive as its chairman. Marchionne said the Chrysler plants that had been shuttered as a result of the company's bankruptcy process will be back up and running "soon," and the company will focus on developing fuel-efficient vehicles that will "become Chrysler's hallmark going forward."
The U.S. Supreme Court on Tuesday cleared the way for the deal after delaying the sale pending review of a case brought by Indiana state pension funds challenging Chrysler's bankruptcy. Those funds argued that they and other lenders deserved better treatment by the bankruptcy court.