* Fiat, VEBA at odds over Chrysler value
* Analysts say VEBA move will not lead to IPO
* Marchionne wants Fiat-Chrysler merger by 2015
By Bernie Woodall and Jennifer Clark
DETROIT, Jan 9 The minority owner of Chrysler
Group LLC on Wednesday pushed the U.S. automaker to take the
first step toward becoming a public company again by demanding
that Chrysler register shares with U.S. regulators.
The minority owner, a United Auto Workers union retiree
healthcare trust, on Wednesday demanded that Chrysler register
16.6 percent of company shares with the U.S. Securities and
Exchange Commission. The trust has the right to make the demand
because of the 2009 agreement that brought Chrysler out of
bankruptcy and left Fiat SpA as part-owner.
But analysts say that there will not be an initial public
offering. They say that the healthcare trust is forcing Fiat's
hand in valuing Chrysler shares now being contested in a
The bankruptcy agreement allows Fiat to buy as much as 3.3
percent of Chrysler every six months, until it reaches a maximum
of 16.6 percent of Chrysler purchased in this fashion.
Sergio Marchionne, chief executive of both Fiat and
Chrysler, has said he wants to merge the two companies by 2015.
The fact that the healthcare trust, a voluntary employee
beneficiary association (VEBA), wants Chrysler to register the
same amount of shares that would be affected by the court's
ruling on their valuation is no coincidence, analysts said.
"The IPO ain't gonna happen," said Richard Hilgert, an
analyst at Morningstar. "VEBA wants to get a pricing on the 16.6
percent so that they can take it to court and say 'this is the
The Italian automaker now owns 58.5 percent of Chrysler and
the VEBA owns 41.5 percent.
The notional value of Chrysler shares has risen sharply
since it was a company standing on shaky ground in 2009 to one
that is the profit center for Fiat, which is struggling due to a
weak European auto market.
Based on filings with the court, Fiat values all of Chrysler
at $4.2 billion, and the VEBA values it at $10.3 billion.
Hilgert valued Chrysler's equity at $13.6 billion in a report
published by Morningstar in May. He thinks Fiat stock is
In November, a UBS report valued Chrysler at $9 billion.
London-based UBS analyst Philippe Houchois also said there
would not be an IPO and that the move by the VEBA is a ploy in
the separate battle over the value of Chrysler shares.
"Fiat is trying to buy Chrysler on the cheap," said
He said the only pressure VEBA can put on Fiat is to list
the shares in an IPO to get a higher price. It is a recognition
that VEBA's case is weak. Houchois said he doesn't think there
will be an IPO.
Fiat contends in court filings that it has set the valuation
of Chrysler in tune with a formula established in the agreement
when the U.S. automaker exited its government-sponsored
"When we signed the damn thing in 2009 it was clear,"
Marchionne said in October, referring to the pricing formula for
the value of Chrysler shares. "Today, now that things have
changed and we're making some money" VEBA wants not to adhere to
the formula, he said.
Brock Fiduciary, which manages the VEBA's investment in
Chrysler, said on Wednesday through a VEBA spokeswoman that it
would not be making a statement. The VEBA deferred any comment
While VEBA owns 41.5 percent of Chrysler, it can only sell
up to 24.9 percent of the company in the equity markets, because
Chrysler has the right to call for up to 16.6 percent through
its periodic purchases.
FIAT CALL OPTIONS
Last July, Fiat filed for the first 3.3 percent tranche of
VEBA-owned Chrysler shares. The VEBA balked at the price Fiat
offered, $139.7 million, saying it was too low. Fiat in
September filed suit against the VEBA to force the healthcare
trust to sell the shares.
The issue is now being considered by a Delaware court.
VEBA told the court that it values the 3.3 percent stake in
Chrysler at $342 million.
Last week, Fiat filed to buy another 3.3 percent tranche of
Chrysler from the VEBA.
Registration of the Chrysler shares by the SEC could take
eight months or longer, said Chrysler spokeswoman Shawn Morgan.
The VEBA may withdraw from the registration process at any
time, she said.
Chrysler has not been a publicly traded company since it was
a unit of Daimler AG. Daimler sold most of Chrysler
to private equity firm Cerberus Capital Management in 2007.
The last time a company called Chrysler was publicly traded
was in 1998, before its merger with Daimler.
The VEBA was granted its shares in Chrysler as part of the
bankruptcy agreement in 2009 because the company could not fund
the healthcare of its retired workers.