Chrysler Group plans to file documents this month that would allow its minority investor to sell shares in a stock market listing, a process that will slow Italian carmaker's Fiat's plans to take full control of the US automaker.
An initial public offering would bring to a head the ongoing battle between Sergio Marchionne, who has led both companies since Chrysler's government-financed bankruptcy in 2009, and a healthcare trust fund affiliated with the United Auto Workers union.
The trust, a type known as a voluntary employees' beneficiary association or Veba, is unhappy with the price Fiat has offered for its Chrysler stake. Now, it is exercising its right to push Mr Marchionne to take Chrysler public.
Mr Marchionne told reporters on Friday that he expects to file the regulatory documents necessary to take Chrysler public by the end of the month – a move that he has long resisted. The IPO could happen during the first quarter of 2014.
Mr Marchionne has repeatedly said he would like to avoid an IPO so that Fiat takes full ownership of the US automaker. An IPO could delay his plans for a full merger of the two companies.
Fiat owns 58.5 per cent of Chrysler and wants to buy the 41.5 per cent stake held by the UAW trust fund, called the UAW Retiree Medical Benefits Trust, to secure access to cash and technology it needs to compete against rivals.
The UAW trust hopes to attract a better price from investors especially as Chrysler’s value continues to rise in the next few years as the US auto industry sustains a robust recovery. But Mr Marchionne hopes the market’s valuation of the US carmaker will convince the Veba to take Fiat’s existing offer.
Fiat shares were down 0.3 per cent yesterday to €6.13, extending losses on Friday after Mr Marchionne said he was not getting any closer to striking a deal with Veba. – (Reuters)