Chrysler Group is expecting to establish a price range for its initial public offering this week at the earliest, the Wall Street Journal reported, citing people privy with the matter. According to the report, the move will put more pressure on owners Fiat and VEBA (voluntary employee beneficiary association) to reach an agreement that would allow the Italian carmaker to obtain full ownership of the US company before the IPO occurs.
The Journal said that Chrysler expects to complete the IPO – which could raise $1.5 billion to $2 billion -- in the first half of December as it will try to beat the market slowdown during the holidays.
The expected price range would indicate Chrysler’s value at between $9 billion and $12 billion, based on the 16.6-percent stake that VEBA, a retiree healthcare trust affiliated with the United Auto Workers union, has asked the US carmaker to register for the IPO. Based on the proposed IPO price, VEBA’s total 41.5-percent stake in Chrysler will have a value of between $3.7 billion and $5 billion.
VEBA had valued its stake in Chrysler at $3.6 billion at the end of 2012, according to a filing with the US Department of Labor. Chrysler filed IPO documents in late September after its majority parent Fiat failed to reach a buyout deal with VEBA. Fiat is seeking to buy out VEBA’s shares in Chrysler, but is not in agreement with the trust’s $5-billion asking price.
In response, VEBA exercised a right entombed in Chrysler's 2009 government-financed bankruptcy to launch an initial public offering, as part of its bid to compel Sergio Marchionne, chief executive of both carmakers, to strike a deal. Reuters reported last week that Chrysler had added four banks to help underwrite the IPO and that the automaker was looking to launch the deal as soon as early December.