Fiat CEO says Chrysler buyout is still not achievable

Article by Anita Panait, on September 16, 2013

Fiat chief executive Sergio Marchionne disclosed that reaching an agreement to purchase the Chrysler Group LLC stakes it still does not own from UAW’s retiree health-care trust VEBA is still far off. Marchionne, who is also Chrysler’s CEO, remarked that VEBA may instead sell part of its 41.5-percent stake through an initial public offering as early as the fourth quarter of 2013, effectively delaying his bid to merge the carmakers that he runs.

Marchionne said that if that happens, Fiat may purchase VEBA’s stake at the market price. The Fiat-Chrysler CEO said he is still in discussions with VEBA to reach an agreement. Fiat and VEBA are currently locked in litigation over the value of part of the stake which Fiat has options to buy.

At the same time, Marchionne is making preparations for a possible IPO of the Chrysler to comply with the UAW's trust's request, which it has the legal right to do.

Marchionne’s decision not to attend the Frankfurt Motor Show earlier this week gave rise to speculation that he was busy concluding Chrysler buyout. He, however, denied the speculations, saying that he just had work to do. He remarked that discussions between Fiat and VEBA are still ongoing.

People privy with the matter told Automotive News that VEBA is aiming to get the highest possible payment it can for its stake in Chrysler. The amount is estimated to be around over $5 billion, according to the terms of Chrysler's 2009 bankruptcy agreement.

Asked to comment on the $5 billion figure, Marchionne quipped that VEBA “should buy a lottery ticket.” Fiat’s top honcho said that IPO could occur in the first quarter of 2014. [source: CBC.ca]

Topics: fiat, ceo, chrysler

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