Chrysler CEO sees a 50% chance of IPO, but he would prefer buyout

Article by Christian Andrei, on March 4, 2013

There’s a 50% chance that Chrysler will go public, according to Sergio Marchionne, the CEO of both Fiat and Chrysler Group LLC unit. Nevertheless, Marchionne said that he would rather that Chrysler will fully merge with Fiat. Chrysler is owned by Fiat and a retiree trust fund affiliated with the United Auto Workers labor union. Marchionne explained that he favors a plan for Fiat to acquire the trust fund's holdings.

When interviewed by reporters in Kokomo, Indiana, Marchionne said that he prefers to have “one single company." In the past four years, Fiat and Chrysler have been merging their operations as Fiat’s share in Chrysler has increased. But then, Fiat has been getting into conflicts with the trust fund with regards to Chrysler’s worth.

The fund is being pressured to get the highest value as it can from its Chrysler holding in order to pay for medical benefits. Chrysler is planning a $374 million investment in four Indiana plants to sustain the production of its more fuel-efficient eight- and nine-speed transmissions by the end of 2013.

This move will lead to the creation of as many as 1,250 jobs in Indiana, which include up to 850 jobs at its new Tipton Transmission Plant.

To roll out a nine-speed transmission at Tipton, Chrysler will have to spend $162 million. It’s believed that Tipton production will begin in the first quarter of 2014. It will cost Chrysler about $212 million to produce the eight- and nine-speed transmissions in the Kokomo Transmission, Kokomo Casting and Indiana Transmission I plants.

These factories will be given more tooling and equipment to start production of Chrysler's eight- and nine-speed transmissions by the fourth quarter of 2013.

Topics: chrysler, ceo, ipo

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