(January 2, 2014) Fiat said Wednesday it had signed an agreement to buy the remaining 41.46 percent stake it does not own in Chrysler Group from the UAW's VEBA Trust, the last step needed before the Italian and U.S. carmakers can merge.

Fiat said the voluntary employee beneficiary association, which covers UAW retiree health care costs, would receive $3.65 billion for the stake. Chrysler also agreed to separately make a total of $700 million in four annual payments to the UAW's trust fund.

The deal is expected to close on or before Jan. 20, Fiat said.

"In the life of every major organization and its people, there are defining moments that go down in the history books," Sergio Marchionne, CEO of both carmakers, said in a statement. "For Fiat and Chrysler, the agreement just reached with the VEBA is clearly one of those moments."

Fiat will pay the trust $1.75 billion from cash on hand when the deal closes. The Turin-based company said it would not need to make any capital increase through a rights issue. Chrysler will contribute $1.9 billion through a special dividend to complete the transaction for the 41.5 percent stake.

The $700 million will paid in a series of four, $175 million annual payments from Chrysler to the VEBA trust, but come with a change agreed to by the UAW.

Sources: Wire reports, Automotive News