Shares in Fiat soared on Thursday after it announced it would take full control of Chrysler, with optimism for the historic deal's potential outweighing concerns over its cost, AFP reports.
Shares in Fiat jumped 16.4 percent by the closing bell in Milan to 6.92 euros in an overall market down 0.20 percent.
The complex $3.65-billion (2.66-billion-euro) deal announced on Wednesday paves the way for a full merger that will create a new global auto giant expected to be the seventh biggest in the world.
Fiat said the long-awaited agreement with its US partner included a $1.75 billion cash payment for the 41 percent stake held by a fund controlled by the US union UAW ever since Chrysler's bankruptcy procedure.
Fiat chief executive Sergio Marchionne, who is also the CEO of Chrysler, said in a statement that the transaction would "go down in the history books".
"The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique," Marchionne said.
Fiat said it expected the deal to be wrapped up by January 20, completing a process that began in 2009 in the wake of the global economic crisis and the plunge in US car sales.
"The costs and financing... of this deal are more favourable to Fiat than the market expected, and the deal successfully secures Fiat's operational and financial future," Max Warburton, a senior analyst at Bernstein Research, told Dow Jones Newswires.
Fiat originally took a 20-percent stake in the third largest US automaker as part of the company's bankruptcy in 2009.
What was originally seen as a risky bet for Fiat -- the German automaker Daimler had failed to turn around Chrysler -- has paid off handsomely as Chrysler's sales are now booming after decades of turbulence and decline.
Chrysler's profits have been keeping Fiat buoyant in recent years amidst a deep downturn in Europe, and Marchionne has been steadily expanding Fiat's stake in Chrysler.
Marchionne's ambitious goal is to create a new global player in the auto industry with the capital and volume to compete with the likes of Toyota and General Motors.
Some analysts expressed caution over Fiat's heavy debt burden, with Citigroup warning that the Italian motor company will become the most indebted mass car maker in Europe.
Aurel BGC also flagged up "the negative impact on Fiat and Chrysler's accounts."
However, Italian trade unions hailed the agreement, saying they hoped it meant Fiat would now start investing more in Italy -- a key bone of contention that has made Marchionne a hate figure for many unionists who suspect he is planning to abandon Italy.
"It is now crucial that investments begin as soon as possible in the Italian factories as has been announced," said Ferdinando Uliano of the Fim-Cisl union.
Fiat employs a total of 197,000 people, including 80,000 in Italy -- making it the biggest private sector employer in the country.
Fiat was founded in 1899 and flourished during Italy's post-war economic boom, in close association with its late chairman Gianni Agnelli -- a fashionable playboy and shrewd tycoon who engineered its international expansion.
It has reflected the downs as well as the ups of Italian industry and it became an important hub of trade union militancy and violent protests in the 1970s and 1980s.
Marchionne was widely credited for the company's turnaround after taking over as CEO in 2004 but domestic sales have been hard hit by the economic crisis and he has had repeated run-ins with unions over work conditions.