Chrysler IPO endangers merger with Fiat
Automaker tires of dealing with union24 September, 18:16
(ANSA) - New York, September 24 - Automaker Chrysler has launched an initial public offering (IPO) on financial markets in the United States in an apparent bid to end a deadlock in negotiations over its future.
Analysts suggested that Sergio Marchionne, chief executive officer of both Michigan-based Chrysler and Italian standard-bearer Fiat, is turning to investors to set the price for Chrysler shares.
The move on Monday came after long-running negotiations broke down with a union fund that holds 41.5% of shares not already owned by Fiat.
It has been suggested that Marchionne is not actually interested in completing the IPO, but instead, is hoping this move will prod his reluctant partner in Chrysler to sell its him its stake and end the manoeuvring.
In fact, Marchionne has previously said that an IPO could present a setback in his plans to proceed with a full merger of the two automakers.
Fiat also said Tuesday that the regulatory filling was no guarantee that the sale of Chrysler shares would proceed.
VEBA, the United Auto Workers retiree health-care trust, has reportedly demanded $1 billion more for its shares than Marchionne wants to pay, despite his desire to control that stake in order to complete a merger of Fiat with Chrysler.
But Marchionne, whose Fiat now holds 58.5% of Chrysler shares, has balked at that price tag - reportedly. VEBA has asked for about $4.25 billion for the shares - and is gambling that outside investors will agree with him. JPMorgan will manage the IPO, Fiat said in a statement on Tuesday. VEBA received its stake in Chrysler as part of the Fiat-Chrysler merger deal in 2009, which rescued the ailing American automaker from bankruptcy.
But since then, Chrysler has found its footing and become more financially stable than Fiat and even a money-maker.
At the same time, Marchionne has been working to merge the two automakers into a global automobile giant on the same scale as such brands as Toyota or General Motors.
Turin-based Fiat has been heavily reliant on money-making Chrysler and its financial assets to keep Fiat afloat in a home market crippled by recession and the fallout from the European debt crisis.
Fiat shares rose as much as 2.6% by early afternoon Tuesday on the news.
According to Bloomberg, the value of Fiat shares have risen by as much as 63% this year, valuing the automaker at 7.73 billion euros.