Chrysler reveals fivefold rise in market value since Fiat started managing it

Article by Christian Andrei, on March 9, 2011

In the first 18 months that Chrysler was being managed by Fiat S.p.A and its CEO Sergio Marchionne, its market value rose nearly fivefold, according to a valuation provided by the company. An analysis of the company's Feb. 25 filing with the U.S. Securities and Exchange Commission indicates that Chrysler Group was valued at about $4.8 billion as of Dec. 31.

This is significantly higher than its estimated value of $996 million in June 2009 when it emerged from a U.S.-funded bankruptcy as U.S. auto sales fell to their lowest level since the early 1980s, says Autonews.

These figures reflect an initial glimpse into the potential valuation of the company as it lays the groundwork for an initial public offering that may take place in the second half of 2011.

Chrysler came at the valuation to set the compensation for its top executives. This is because senior executives are paid partly through so-called deferred phantom shares, which will be converted to shares in the company at a later date. The filing said that in June 2009, each share was worth $1.66.

But by the end of 2010, the value of each share was $7.95. In the filing, Chrysler issued a warning that the actual value of each share may vary depending on when the stock is paid.

The increase in Chrysler's value occurred together with sudden improvement in U.S. auto sales, which climbed over 11% in 2010. This snapped a four-year drop that compelled Chrysler and rival General Motors into a restructuring that included U.S. funded bankruptcies.

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