Volkswagen, the German automaker that has been embroiled in a scandal over emissions, has announced a $3 billion bid to buy the US car brand and its US operations from its US parent, Fiat Chrysler.
The move comes after the US government announced last week that it was seeking to acquire more than $4bn of Fiat Chrysler’s shares, worth about $1.2bn at the time.
The news was met with anger from car industry insiders, who believe the move will be used to sell off parts of the company.
“The news today confirms what I’ve said for years,” said Michael Lombardo, president of the National Automobile Dealers Association.
“We’re not going to see a Fiat Chrysler buyout anytime soon.”
The move was made official by Fiat Chrysler chief executive Sergio Marchionne on Thursday.
Fiat Chrysler shares fell as much as 4.6% in early trading on the New York Stock Exchange.
But a spokesman for Fiat Chrysler said the automaker was not planning any major sale, adding that the deal with Volkswagen was a strategic one that would allow Fiat Chrysler to remain focused on its US brands.
“This is a business-to-business transaction and it’s important for Fiat to maintain our strong position in the US market,” Fiat Chrysler spokesman Michael DeBartolo said.
The deal has not yet been announced by Volkswagen or Fiat Chrysler, who are expected to make an announcement on Friday.
The announcement was first reported by the Wall Street Journal.
It follows the company’s decision to buy back its stake in GM’s car brand, after it failed to reach a settlement with the US Department of Justice over emissions violations in the Chevy Volt and Chevrolet Sonic.
Fiat Chrysler shares have fallen as much by as 11% since the news broke last week.