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Chrysler risks Fiat battle on plan for small investor to sell shares
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United States carmaker Chrysler plans to file documents this week that would allow its minority investor to sell shares in a stock market listing, bringing to a head a battle with majority owner Fiat which wants to take full control of the business.
Italian automaker Fiat wants to buy the 41.5 percent stake in Chrysler held by VEBA, a healthcare trust affiliated to the United Auto Workers union, to secure access to cash flow and technology it needs to compete against rivals.
But VEBA is not happy with the price Fiat has offered.
Although a listing would drag out the sale process for VEBA, it will be hoping to get a better price from investors or to force Fiat to raise its offer.
Meanwhile Fiat, which already owns 58.5 percent of Chrysler, will be hoping the stock market’s valuation of the US carmaker will show its existing offer is VEBA’s best option.
“It’s in the interest of both parties, but of Fiat in particular, to reach an agreement before a Chrysler IPO,” said ICBPI analyst Luca Arena.
Fiat Chief Executive Sergio Marchionne, who is also the CEO of Chrysler, was quoted by the Financial Times newspaper yesterday as saying the US carmaker was planning to file documents with regulators for the stock market listing this week — earlier than expected.
“We need to go trough this process of determining value,” he said. “(VEBA) have been very clear that they are not long-term holders of the assets. They want to monetize so we need to find a way that ... does not create what I consider to be exceptionally high or abnormal expectations of value.”
Marchionne said on Friday any listing could take place in the last quarter of this year but was more likely to happen in early 2014, and could delay his plans for a full merger of the two groups.
People familiar with the matter have told Reuters that VEBA is seeking more than US$5 billion for its stake, which it obtained as part of Chrysler’s 2009 bailout.
UBS analysts estimate the stake is worth about US$4 billion.
VEBA can sell a stake of up to around 25 percent of Chrysler in a stock market listing.
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