* 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 offering was expected to help settle a
long-running spat over the U.S. automaker's value between Fiat
and a retiree healthcare trust tied to the United Auto Workers
union, which owns 41.5 percent of Chrysler.
The delay represented yet another obstacle to Chief
Executive Officer Sergio Marchionne's plan for the Fiat-Chrysler
alliance, one of the centerpieces of the Obama administration's
2009 restructuring of the U.S. auto industry.
Chrysler's board of directors "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
The company said it expected Chrysler to work toward 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."
In a regulatory filing late Monday, Chrysler said it
intended to list its shares on the New York Stock Exchange under
the symbol "CGC." The company also added five other
underwriters, including Bank of America Merrill Lynch,
which with JPMorgan Chase & Co, will lead the IPO.
The additional bookrunners are Barclays Plc,
Goldman Sachs Group, Morgan Stanley and UBS AG
Marchionne, who has run both Chrysler and Fiat since 2009,
was looking to kick off its IPO road show in early December, but
that was pushed back after a U.S. tax issue emerged, two sources
Fiat assumed management control and a stake in Chrysler
after the U.S. automaker emerged from a government-funded
bankruptcy restructuring. Fiat has since increased its stake in
Chrysler to 58.5 percent.
The Chrysler IPO process is already highly unusual because
Marchionne has publicly said an IPO would undermine his plans to
merge the two companies. But his inability to secure a deal with
the UAW trust fund made an IPO impossible to avoid.
This feud between Chrysler's two shareholders came to a head
in late September when the UAW trust exercised a right enshrined
in Chrysler's 2009 bankruptcy documents to force the U.S.
automaker to file IPO paperwork.
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 ended the day down 3.5 percent, compared with a
0.2 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 did
not respond to requests for comment. 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.