Shares in Fiat surged over 15% on Thursday following an announcement that it intends to buy the remaining 41% of Chrysler it does not own. Fiat has owned a majority stake in the company since 2009.
A Fiat logo on a Gucci Fiat 500 car in Beijing. Photo: AFP (file)
The BBC reports the move will create the world's seventh-largest car company.
Chrysler and Fiat will pay an initial $3.65 billion to Veba, the trust affiliated to the United Auto Workers' Union in the United States. When the deal is signed, Chrysler will pay Fiat another $US700 million.
The Veba trust looks after medical benefits for 117,000 retired Chrysler employees and their dependents.
Recently, Chrysler reported a rise of 22% in third-quarter profits to $US464 million, with net revenue up 13.5% to $US17.6 billion.
The company said its results had been helped by strong sales of its Jeep Grand Cherokee and the Ram 1500 pickup.