Fiat to pay $1.27bn for 16% of Chrysler

Italian automaker Fiat SpA has agreed to pay USD 1.27 billion euros for another 16% 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% 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% of the Big Three U.S. automaker and expects to add another 5 percent by the end of 2011, it said. The 16% stake would eventually bring Fiat's holding to 51%. Three sources familiar with the issue said last week that Fiat was looking to pay around USD 1.5 billion for the stake and the deal would be closed in coming months. Shares in Fiat were up 2.43% at 6.735 euros at 0710 GMT. The STOXX Europe 600 autos index were up 0.15%.