Sergio Marchionne, the CEO of Fiat and Chrysler, said that Fiat is not any nearer to reaching a deal with a United Auto Workers retiree health-care trust to purchase what’s left of the remaining stake it doesn't yet own in Chrysler. When interviewed by reporters in L'Aquila in the central Italian region of Abruzzo, Marchionne said that talks with the labor group will continue.
On September 23, Chrysler filed for an IPO at the request of the trust. It’s possible that the preparations for the stock sale will aid in resolving a pricing conflict over the trust's stake that has stopped Marchionne from completing a full takeover of Chrysler. Marchionne also said that he hopes that it will be “very clear” what markets think Chrysler is worth, which he says is the only real reference point.
He also mentioned the positioning of clear road markers that both sides can recognize. Fiat thinks that the relationship may be placed at risk if Chrysler goes through with the IPO. Debt and equity investors are closely looking at the Chrysler buyout talks since Fiat’s long-term plan to cut losses in Europe relies on its being able to simply and affordably share technology, cash and dealer networks with Chrysler.
Fitch Ratings released a note on Thursday, citing the possibility that a Chrysler IPO may result to a downgrade since it may complicate overall group corporate governance and management, specifically due to a fragmented shareholding structure, and extend the refinancing process of Chrysler's debt.
For the past four years, Marchionne has been working to combine Fiat and Chrysler to create a global player with the scale to be competitive with Toyota Motor Corp., General Motors Co. and Volkswagen Group. What he offered the trust is around $1 billion lower than what the labor group wants for its stake. To resolve this dispute, both sides may go to trial in a Delaware court as late as 2015. [source: automotive news - sub. required]