Chrysler Group LLC Monday filed for an initial public offering, a
move forced by the failure of the auto maker's Italian majority owner
and its main union to agree on the company's value.Fiat SpA, F.MI +0.08%
which owns 58.5% of Chrysler, doesn't want a share sale and is eager to
own the company outright. But the United Auto Workers union health
trust, holder of a 41.5% stake in the No. 3 Detroit auto maker, has
demanded that its shares be offered to the public after negotiations to
sell them to Fiat stalled.In its Monday filing, Chrysler warned that if
Fiat can't get control, the Italian auto maker could turn its back on
Chrysler,High Quality Lamplo Silk Oval Bell Lamp Shade LS30008 unwinding
a deal that was a centerpiece of the Obama administration's 2009 auto
industry rescue.Analysts and others familiar with the situation say Fiat
will likely now redouble efforts to reach a private deal with the
UAW.On Tuesday, Fiat said the regulatory filing is no guarantee that the
sale of Chrysler stock will take place.
An IPO would follow
General Motors Co.'s record-breaking offering in November 2010, which at
$23.1 billion was the world's largest at the time. Analysts estimate
Chrysler could be worth between $10 billion and $11 billion, depending
upon market conditions.The UAW health-care trust holds its minority
stake in Chrysler as part of the auto maker's 2009 government-led
bankruptcy restructuring. The filing doesn't state a price for the
shares, or how many will be offered. J.P. Morgan is the sole underwriter
listed.PET protective filmFour
years ago, Fiat saved Chrysler from a possible liquidation. Now, in a
merged company, Chrysler's U.S. truck and sport-utility lines could prop
up Fiat while it overhauls money-losing European operations.Fiat Chief
Executive Sergio Marchionne, who also leads Chrysler, wants to own
Chrysler outright and merge the two companies into a single auto maker.
Mr. Marchionne has said a public offering could come in the first
quarter of 2014, but that he wants to avoid one by buying out the union
trust's holdings in a private deal. A deal between Fiat and the UAW
trust could still take place before any shares are sold.
"Fiat
has informed us that it is reconsidering the benefits and costs of
further expanding its relationship with us and the terms on which Fiat
would continue the sharing of technology, vehicle architectures and
platforms, distribution networks, production facilities and engineering
and management resources," Chrysler said in its filing.But Fiat and the
trust haven't been able to agree on a price. The trust, which was set up
by the union to pay out medical benefits for Chrysler retirees, values
the stake at about $4.27 billion, more than double what Fiat thinks it
is worth, based on their respective calculations.When GM launched its
postbankruptcy IPO in 2010, the goal was relatively straightforward: The
U.S. Treasury, seeking to recoup its bailout, wanted the maximum price
for its shares.However, Mr. Marchionne,Protective film as
Chrysler CEO, is in the awkward situation of having to meet with
investors and persuade them to pay top dollar for shares that as Fiat's
CEO he would prefer to buy on the cheap.An IPO could further delay Mr.
Marchionne's plans to combine Chrysler and Fiat, by fracturing
Chrysler's ownership structure and diluting Fiat's control.nsk bearing Such
a setback would come at a crucial time for both auto makers. The
companies are working to pool resources and jointly develop new cars
essential to their competitiveness. However, they haven't been able to
fully capitalize on those synergies because their cash and balance
sheets remain separate.
"We're going to work diligently to
satisfy the [trust's] interest in going public, but at the end of the
day the market reference for the price is the market reference of the
price,High Quality Lamplo Silk String Chandelier Lamp Shade LS30005"
Mr. Marchionne said earlier this month.Fiat and the trust have been
battling over the value of the Chrysler shares for more than a year and
have already turned to a Delaware court judge to help settle a dispute
over the value of a portion of the health-care trust's stake.In July,
the judge overseeing the case ruled partially in favor of Fiat's
valuation of the Chrysler shares, but he said he needed more information
and expert testimony to make a final decision, further stalling a
resolution.The health-care trust's motives are clear. It needs to get as
much as it can for its Chrysler stake to ensure it has enough money to
pay medical benefits for tens of thousands of current and future
Chrysler retirees.
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