Chrysler prepares for IPO


(Justin Sullivan/Getty Images)
September 23, 2013

Chrysler Group is reluctantly preparing for an initial public offering of some of its shares.

The automaker is proceeding with the IPO after it failed to reach an agreement on the value of the stock with the retiree trust that owns it.

Chrysler shares haven’t been publicly traded since 1998, when the company merged with Daimler. The automaker, based in Auburn Hills, Mich., is majority owned by Italian automaker Fiat.

The shares that would be sold are owned by a United Auto Workers-run trust that pays the health-care costs for about 130,000 blue-collar Chrysler retirees. The trust owns a 41.5 percent stake in Chrysler and would get all of the proceeds from an IPO.

Sergio Marchionne, chief executive of both Fiat and Chrysler, has said he wants to buy up the UAW’s shares and combine Fiat and Chrysler. But Fiat and the trust have been unable to agree on a price. The trust has set the value of the stake at $4.27 billion, while Fiat says it’s worth $1.75 billion.

At the trust’s request, Chrysler filed the IPO paperwork with the Securities and Exchange Commission late Monday. But Chrysler emphasized that the shares may never be publicly sold. The two sides could still reach an agreement on the price of the shares without an IPO.

The trust did not immediately respond to an e-mail seeking comment. But it probably calculated that its shares are growing in value as Chrysler’s sales and profits improve with the economy. Chrysler reported its eighth-straight quarterly profit in the April-June period, with net income up 16 percent to $507 million.

In its filing, the company also warned that the IPO could hurt Fiat’s alliance with Chrysler. Fiat owns 58.5 percent of Chrysler.

“Fiat has informed us that it is evaluating the various potential impacts that a public offering and the consequential introduction of public stockholders may have on its views of the Fiat-Chrysler alliance, and as such, is considering whether or not to continue expanding the Fiat-Chrysler alliance beyond its existing contractual commitments,” Chrysler said.

— Associated Press

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