* Fiat says expects Chrysler to work on IPO for Q1 2014
* Fiat says uncertain if and when IPO will happen
* IPO delay prolongs uncertainty over potential Fiat-VEBA
By Agnieszka Flak
MILAN, Nov 25 The planned stock market listing
of Fiat's U.S. unit Chrysler will not take place this
year, the Italian carmaker said on Monday, prolonging the
uncertainty over its chances of buying out the rest of the
The initial public offer, which Fiat CEO Sergio Marchionne
had previously said could take place in 2013, was expected to
shed light on the U.S. carmaker's value and help settle a
long-running spat between Fiat and a healthcare trust which owns
41.5 percent of Chrysler.
"The Board of Directors of Chrysler Group ... has determined
that it will not be practicable for Chrysler Group to launch and
complete an initial public offering prior to the end of 2013,"
Fiat said in a statement.
It said it expected Chrysler to work towards an IPO in the
first quarter of 2014, but added it could not say if and when
such an offer would happen as it would depend on "market
conditions and other relevant considerations".
Fiat, which has a 58.5 percent stake in Chrysler, wants to
buy the rest of the U.S. carmaker, but has not been able to
agree a price with the United Auto Workers (UAW) union, which
owns the rest via its retirees' healthcare trust VEBA.
Chrysler filed paperwork for an IPO in late September.
Investors had hoped that the preliminary work for the IPO of
part of the VEBA stake might have helped narrow the difference
between the two sides, and that they could reach a deal without
carrying out the share sale.
"Nobody really believes there will be an IPO, but any delay
in the IPO process means there will be a delay in the two
parties striking a deal," a Milan-based analyst said. "The stock
is reacting on the uncertainty."
Fiat shares fell as much as 3 percent after the statement,
and were down 3.1 percent at 5.77 euros by 1532 GMT, compared
with a 0.45 percent fall in Milan's blue-chip index.
According to the Wall Street Journal, Chrysler expects to
raise between $1.5 billion and $2 billion in the IPO. Based on
the 16.6 percent stake that the trust has demanded the company
register for the IPO, this would imply a total value for the
U.S. firm of between $9 billion and $12 billion.
Fiat declined to comment on the report, while Chrysler could
not immediately be reached. Some analysts have said the company
is worth around $10 billion.
Marchionne, the CEO of Fiat and Chrysler, wants to merge the
two firms to create the world's seventh-largest carmaker.
The UAW became Chrysler's second-largest shareholder when
the automaker emerged from bankruptcy in 2009 and the union took
a stake in place of future healthcare payments. VEBA manages
those healthcare benefits on behalf of the union.
Chrysler, which Fiat has been running since a bailout deal
with the U.S. government, is now a profit centre for Fiat.
The Italian carmaker has been hurt by sagging sales for
automobiles in Europe, while Chrysler's home North American
market has seen sales rise nearly 50 percent since 2009.
The Chrysler buyout talks are being closely watched by debt
and equity investors, because Fiat's long-term plan to cut
losses in Europe depends on its ability to easily and cheaply
share technology, cash and dealer networks with Chrysler.
Chrysler and Fiat currently are forced to manage their
finances separately. A full merger would make it easier - but
not automatic - to combine the cash pools of the two companies,
giving Fiat more funds to expand its product lineup.