Fiat Threatens Chrysler Pullback With Union-Pushed IPO
By Tommaso Ebhardt and Lee Spears - Sep 24, 2013
Fiat SpA, the majority owner of Chrysler Group LLC, threatened to pull back from future commitments to the American carmaker if a health-care trust succeeds in selling its stake in an initial public offering.
“Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us,” Chrysler said in the filing for the share sale. “This could include decisions on capital preservation and allocation, investments and locations of production facilities.”
Realigning the partnership would be a worst-case scenario for Sergio Marchionne, who runs both automakers and is looking to use the sale process to get investors to weigh in on Chrysler’s value and end the stalemate preventing a full merger.
The warning to the United Auto Workers retiree trust, which owns the 41.5 percent of Chrysler not held by Fiat, is ultimately meant to prevent the trust from selling shares on the market and instead force an agreement with the Italian automaker on the price. Marchionne is offering at least $1 billion less than what the trust wants and banking on investors being uneager to pay a premium in an IPO opposed by Fiat.
“Marchionne is laying his cards on the table and very clearly explaining that a Chrysler IPO is not in Fiat’s interest as the ownership of Chrysler is crucial,” Giuliano Noci, a marketing professor at Milan Polytechnic, said by phone. “He doesn’t hide his real intentions.”
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http://www.bloomberg.com/news/2013-09-23/chrysler-files-for-ipo-as-fiat-seeks-deal-to-merge-automakers.html