The agreement includes a ‘special distribution’ of $1.9bn payable by Chrysler Group to its shareholdes while Fiat will pay the remainder of approximately $1.750bn in cash purchase consideration to the VEBA Trust.

The deal will also see Chrysler pay the VEBA Trust an additional $700 million in four equal annual instalments. The initial payment will be made on closing of the transaction with FIAT and additional payments will be payable on each of the next three anniversaries of the initial payment. Chrysler Group said it expects to fund the initial contribution to the VEBA Trust from available cash on hand.

The agreement also enables Fiat to avoid an initial public offering of Chrysler.

Sergio Marchionne, chief executive of Fiat and chairman and CEO of Chrysler Group, said: ‘In the life of every major organisation and its people, there are defining moments that go down in the history books. For FIAT and Chrysler, the agreement just reached with the VEBA is clearly one of those moments. I will be forever grateful to the leadership team for the support and unwavering dedication shown to the integration project that today has taken its final shape. The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organisation that will ensure all employees a challenging and rewarding environment.’

The deal is expected to close on or before 20th January 2014.