Chrysler Looking into Filing an IPO; Fiat Plans to Absorb Rest of Company
Fiat is the Italian superhero Chrysler needed, bailing out America's third-largest car company in 2009 following its bankruptcy. Fiat now owns 59 percent of Chrysler and would like to get the rest of the company under its stewardship. "We have gone beyond the dating stage," says Fiat and Chrysler CEO Sergio Marchionne, according to CNBC. "This has gone into some heavy-duty relationships that need to be consummated in some fashion. We need to bring home the bacon now." What's standing in the way? First up, the UAW. Fiat is attempting to buy another six percent of Chrysler from the UAW's VEBA retirement fund that owns the stock. The two sides are battling back and forth in court because they can't agree what to sell it for. The UAW thinks it could get a higher price for the shares it owns than Fiat is willing to pay. "I think Fiat will hae to make a decision whether it wants Chrysler to IPO or whether it wants to preempt the IPO and effectively pay for it." Fiat could also leverage debt with a bond, but it would have to do it in Italy--and pay it back with Italian interest rates. Europe is going through a destructive recession right now, and with the economy as unstable as it is, that could hurt Fiat in the long run with runaway inflation. Once downtrodden itself, Marchionne has brought Fiat--which owns Alfa Romeo, Maserati, Ferrari, Iveco trucks, and several other brands--back to being one of the world's premier automakers, with Chrysler's portfolio being pivotal in its resurgence. As much as Marchionne wants to bring Chrysler and Fiat completely under the same roof, the best thing to do for now might be to wait out the storm and slowly purchase the remainder of Chrysler with the $13 billion it has stowed away in its rainy day account. Source: CNBC
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