Fiat SpA (OTCMKTS:FIATY) (BIT:F) chief Sergio Marchionne said that Chrysler Group LLC could launch an IPO in New York during the first quarter of 2014. That could prove troublesome for the Italian automaker that wants to merge Chrysler Group LLC with Fiat. He said the American automaker could also go public by the end of this year, but that’s not very practical.
Chrysler’s IPO could make things difficult for Fiat
Fiat SpA (OTCMKTS:FIATY) (BIT:F) owns 58.5% stake in the company. The remaining 41.5% stake in Chrysler is owned by a retiree health-care trust VEBA, which is an affiliate of the United Auto Workers. Sergio Marchionne, who is the CEO of both companies, wants to buy out VEBA’s stake. But the healthcare trust is pushing for an IPO of Chrysler. Marchionne told reporters during an event in Turin that Fiat could also purchase VEBA’s holding at the market price.
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Fiat SpA (OTCMKTS:FIATY) (BIT:F) chief said that negotiations are going on, but the two parties haven’t reached a conclusion. He said an IPO of Chrysler Group LLC could delay the merger between two companies. Chrysler Group LLC is expected to submit the IPO documents to the Securities and Exchange Commission by the end of September to list a 16.6% stake, according to Tommaso Ebhardt of Bloomberg. VEBA has the legal right to sell part of its Chrysler stake in an offering.
Fiat and VEBA in court dispute over Chrysler
Fiat SpA (OTCMKTS:FIATY) (BIT:F) and VEBA are involved in a court battle over the value of VEBA’s stake in Chrysler, which the Italian automaker has options to purchase. According to their agreement, Fiat could purchase VEBA’s entire holding for $4.25 billion. But the Italian company will also have to pay a 9% annual interest since January 2010. The public offering is VEBA’s way of putting pressure on Fiat to reach a deal.
Sergio Marchionne has been trying since 2009 to merge the two companies to better compete with Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), Volkswagen AG (ETR:VOW) (OTCMKTS:VLKAY) and Toyota Motor Corporation (TYO:7203) (NYSE:TM). The merger of Fiat SpA (OTCMKTS:FIATY) (BIT:F) and Chrysler will bring popular brands like Ferrari, Maserati, Chrysler, Dodge, Jeep and Fiat under one umbrella.
American shares of Fiat SpA (OTCMKTS:FIATY) (BIT:F) sank 1.08% to $8.21 at 9:38 AM EDT.