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Business litigation may be necessary to decide stock price

Georgia car aficionados may know that Fiat SpA owns automaker Chrysler. As such, Fiat has been trying to purchase the stock owned by the second largest shareholder in Chrysler, the United Auto Workers (UAW) healthcare trust. The parties have resorted to business litigation to settle on a price for the shares owned by the UAW health care trust.

The trial was recently set in this case for Sept. 29 to Oct. 3, 2014. Fiat was hoping that the trial would be sooner and even offered to fly people wherever they needed to be for depositions in order to move things along. However, the UAW healthcare trust requested a trial date in Jan. 2015. Fiat is anxious to get its hands on the 41.5 percent of Chrysler stock currently owned by the UAW health care trust as the result of an agreement forged during Chrysler's 2009 bankruptcy.

Fiat has offered a price of $139.7 million for the 54,154 shares owned by the UAW healthcare trust. The trust, however, believes the value of the shares to be closer to $343.1 million. The original agreement specified that any disputes between the parties were to be taken to the Delaware courts to be heard before a judge only. The UAW healthcare trust believes it will be necessary to take the testimony of people that were present when the agreement for the shares was negotiated as well as accountants to assign a value to the stock.

This business litigation covers the first call option (there are five in total). If Fiat obtains all five options, over time it will leave Fiat with another 16.6 percent interest in Chrysler. When a large stockholder wishes to own a larger percentage of a business, it must first provide the seller with a reasonable price. As can be seen in this case, it isn't always possible to negotiate a satisfactory deal without court intervention. It may become necessary for a Georgia stockholder to go to court in order to negotiate a fair price as well regardless of whether that stockholder is buying or selling.

Source: Reuters, Fiat fails to get quick trial in Chrysler stake dispute, Tom Hals, Oct. 14, 2013

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