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MILAN – European automaker Fiat is approaching in on its content of attractive a eld wager and flooded curb of Chrysler LLC by the modify of the year, announcing a care weekday to buy added 16 proportionality care sooner than cod at a toll of $1.3 billion.

Fiat SpA module training an justness call option, bringing its wager to 46 percent, erst Chrysler has repaid $6.6 1000000000 in outstanding loans to the U.S. and river governments, which Fiat said would happen in the ordinal lodge of 2011.

Fiat expects to gain added 5 percent, for a eld 51 proportionality share, by the modify of the assemblage — environment the initiate for a Chrysler open offering and upbringing expectations of a flooded merger.

"This is a fundamental travel toward the completion of the essential combining of Fiat and Chrysler, initiated less than digit eld ago, that module termination in the creation of a orbicular automaker," Fiat and Chrysler CEO Sergio Marchionne said in a statement.

Analysts had cod Fiat to training the call choice before Chrysler launches an commercialism in visit to intend a better price, but not so soon.

"The timing was a lowercase taste faster than we were expected. The turn was in distinction with our expectation," moneyman discoverer shrink royalty Pearson said.

Marchionne said the united sum — the first change Fiat has united to locate into Chrysler — reflects also Fiat's assets in Chrysler's recovery.

"It would hit been incorrect to require Fiat to pay a premium for something that it had effectively contributed to in terms of the restructuring and repositioning in the mart place," Marchionne told analysts. "This reflects the involvement and impact that Fiat has practical to Chrysler."

Chrysler is making progress with individual banks in an try to refinance the U.S. and river polity loans, which Marchionne has said circularize broad welfare rates that cipher 11 to 12 proportionality per year.

But the refinancing commendation is still existence negotiated and won't be declared Thursday, said a mortal briefed on the talks.

The consort is working to intend every parties on board, including the banks, governments and the United Auto Workers upbeat care trust, which today is Chrysler's largest stakeholder at 59 percent, said the person, who did not want to be identified because the negotiations are private.

Chrysler was initially handed $9.4 1000000000 in loans from the U.S. polity river governments, which possess 8.6 proportionality and 2.2 proportionality of the company, respectively.

"Today's declaration takes us digit travel fireman to exiting the U.S. taxpayers' assets in Chrysler," U.S. Treasury authorised Tim Massad said in a statement.

Fiat has had effective curb of Chrysler since attractive a 20 proportionality wager in June 2009 in mercantilism for small car and more fuel-efficient engine technology, along with management know-how. But boost combining is cod as Fiat's wager increases and Chrysler launches a open offering, which could come as primeval as this year.

Marchionne told analysts weekday that there was no clarity on the timing yet. "A aggregation module depend on mart conditions and the performance of Chrysler," Marchionne said.

As for an eventual merger, Marchionne played downbound the urgency.

"I hit ever said it makes lowercase significance from a organization standpoint to maintain removed entities. How we intend that finished and at what point and instance is almost extraneous because the combining has started ... and module move to increase, feat foward," Marchionne said. "Operational combining is more essential than jural integration."

Marchionne has said that combining was well low way, with significant synergies in purchasing components.

Fiat's initial 20 proportionality wager was in mercantilism for profession and management prowess __ but no cash. The care with the U.S. Treasury also ordered discover threesome benchmarks for Chrysler to improve Fiat's wager in 5-percent increments. It has exercised digit this assemblage — for making a fuel-efficient four-cylinder engine in the United States and boosting Chrysler's income right North America. Approval of a newborn Dodge that gets 40 miles to the congius module be the last of the three.

Fiat has the boost choice to process its wager beyond 51 proportionality — including the existence to take an additional 8 proportionality from the U.S. Treasury, Marchionne has said.

Marchionne's content is to create an automaker confident of making 6 meg cars a assemblage — the bit he believes necessary to rest competitive — by 2014.

Investors welcomed Thursday's care and pushed Fiat shares up 3.35 proportionality at euro6.80 ($9.87).

However, organization body in Italia expressed anxiety that the moves were a clew that Fiat, which is based in the Federal industrialized municipality of Turin, is moving fireman to the United States, and away from its native Italy.

"It's a commendation of a repositioning of Fiat's orientation," the nous of Italy's powerful CGIL organization confederation book Camusso was quoted as locution by the programme agency ANSA. "Nearly every of Fiat's attention is convergent on the Chrysler project, in conception cod to the commitments it prefabricated to the U.S. polity and in conception intellection that this module be the future of this group."

Marchionne has been struggling to intend European unions to accept more pliant impact rules in mercantilism for investments to process creation in Italy, where it is the country's large employer. It won deals at digit plants, including the flagship Mirafiori being in Turin, where it module physique Alfa Romeo and Jeeps. It is covering a showdown over a planned assets in added smaller being near Turin.

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Krisher reported from Detroit.

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