UPDATE 1-Fiat aims to boost Chrysler stake
* Fiat seeks to buy another 3.3 pct stake from UAW trust
* Fiat, trust still wrangling over Chrysler price in Delaware court
* Resolution in court expected within "next several months"
MILAN/DETROIT, Jan 3 (Reuters) - Fiat SpA has told the minority shareholder in Chrysler Group LLC of its intention to buy another 3.3 percent stake in the smallest U.S. automaker for $198 million, the Italian automaker said on Thursday.
The announcement is another step to fulfil Chief Executive Sergio Marchionne's aim for Fiat to own all of Chrysler by buying the 41.5 percent stake now owned by the retiree healthcare trust fund affiliated with the United Auto Workers union.
The two investors have been wrangling over Chrysler's value since last year, when the UAW trust fund rebuffed Fiat's attempts to buy a 3.3 percent stake in Chrysler for $139.7 million, saying the price was too low.
Fiat, which owns 58.5 percent of Chrysler, then sued the UAW trust fund, and the two parties are attempting to resolve the dispute in a Delaware court.
A determination by the court "is currently expected within the next several months," Fiat said in a statement. If this sale and the transaction announced Thursday go through, Fiat will own 65.17 percent of Chrysler.
The UAW trust, known as a VEBA, or voluntary employees beneficiary association, took the stake in Chrysler during the carmaker's U.S.-government-led restructuring in 2009.
The entity, which manages medical benefits for 824,000 blue-collar retirees, is seeking to maximize the holding's value to cover escalating healthcare costs for Chrysler's retirees.
Fiat holds options to buy up to 40 percent of Chrysler owned by the UAW trust that can be exercised until the end of June 2016.
The price will be based on a multiple - not exceeding Fiat's multiples - of Chrysler's core earnings in the past four quarters, less net industrial debt, Fiat said on Thursday.
A spokesman and an attorney for the VEBA did not have an immediate comment on Fiat's announcement.