Chrysler IPO Leaves Fiat Pondering Its Options
The filing for an initial public offering of the Chrysler family of brands on Monday has reportedly left Fiat SpA (FIATY.PK) reconsidering its backing of the Detroit-based automaker, Reuters says. Fiat is Chrysler’s largest shareholder with a 58.5 percent holding in the company. Fiat is intending to take over the remaining portion of Chrysler’s worth, which is currently owned by the United Auto Workers trust fund. However, the UAW trust is asking for more than $5 billion for its share, and Fiat is having trouble justifying the price tag assigned to that block of the company.
Instead of outright negotiations to work out a price that would more fit Fiat’s projections of what the remaining 41.5 percent is worth, the UAW trust exercised a right bestowed in Chrysler’s 2009 government-financed bankruptcy to go forward with an initial public offering, putting increasing pressure on the chief executive of both automakers, Sergio Marchionne, to reach a deal.
The temperature on the situation is that the UAW trust is using the IPO mechanism as a way of pressuring Fiat for a better offer, and many are convinced that the actual IPO launch will never take place. Fiat, in turn, is somewhat upset about the turn of events.