Fiat to pay $1.27b for 16pct of Chrysler

Italian automaker Fiat SpA has agreed to pay $1.27 billion euros for another 16 percent stake in US peer Chrysler this quarter, the Italian automaker said on Thursday, in a deal that was faster and cheaper than expected. Fiat has reached agreement with Chrysler and its other shareholders to exercise an option to buy the 16 per cent stake in the second quarter, it said in a statement.

The option would be exercised when Chrysler's debt with the US and Canadian governments is repaid, it said. Fiat owns 30 per cent of the Big Three US automaker and expects to add another 5 per cent by the end of 2011, it said. The 16 percent stake would eventually bring Fiat's holding to 51 per cent. Three sources familiar with the issue said last week that Fiat was looking to pay around $1.5bn for the stake and the deal would be closed in coming months. Shares in Fiat were up 2.43 per cent at €6.735 at 0710 GMT. The Stoxx Europe 600 autos index were up 0.15 per cent.