September 13, 2013 / 12:00 PM / in 4 years

Fiat CEO says still far apart from Veba on Chrysler buyout

TURIN, Italy (Reuters) - Fiat SpA FIA.MI Chief Executive Sergio Marchionne said he did not think the Italian carmaker was getting any closer to an agreement to buy the remaining stake in its U.S. unit Chrysler.

Marchionne already manages Fiat and Chrysler as a single company, but owning all of Chrysler would make the combined group a stronger competitor to rivals like General Motors (GM.N) and Toyota (6201.T).

Asked whether Fiat was getting nearer to a deal with the U.S. VEBA healthcare trust that owns the minority stake in Chrysler he wants to buy, Marchionne said on Friday: “I don’t think so.”

VEBA can sell its entire 41.5 percent stake to Fiat, or - if it thinks it can get a better price - can sell part of it in an initial public offering.

Fiat shares fell 2.8 percent to 6.06 euros ($8.06) following Marchionne’s remarks, made on the sidelines of a ceremony at Turin city hall.

“Marchionne is a good negotiator but he needs to convince VEBA,” said a trader on Friday. “And as long as there’s no agreement there’s no certainty.”

The CEO’s surprise decision not to attend the Frankfurt car show earlier this week sparked a rally in the stock on hopes he was busy wrapping up the Chrysler buyout.

That was not the case, he said on Friday, looking relaxed and chatting with reporters.

“I had work to do,” he said when asked why he canceled a scheduled visit to the car show.

In the meantime, talks continue, he said.

    VEBA’s goal is to obtain the highest possible payment it can for its stake, people familiar with the situation have said.

    That would be over $5 billion, according to terms of Chrysler’s 2009 bankruptcy agreement.

    “They should buy a lottery ticket,” Marchionne said to reporters when asked to comment on the $5 billion figure.

    If the two sides cannot agree on a price, the trust plans to sell a portion of its stake in an initial public offering on the New York Stock Exchange.

    The IPO could take place in the first quarter of 2014, Marchionne said on Friday. ($1 = 0.7514 euros)

    Reporting by Stefano Rebaudo and Isla Binnie; Writing by Jennifer Clark; Editing by Elaine Hardcastle

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