VEBA, a UAW’s healthcare trust fund, has hired Deutsche Bank as advisor for its planned divestment of its stake at American carmaker Chrysler Group LLC, two people familiar with the matter told Reuters. VEBA, short for Voluntary Employee Beneficiary Association, is currently in a row with Italian carmaker over the value of its stake in Chrysler.
Fiat and VEBA hold 58.5-percent and 41.5-percent stakes in Chrysler, respectively. Fiat is seeking to buy VEBA out of Chrysler to pave way for the merger between the US and Italian carmakers to create a global company large enough to duke it out with leading players in the auto industry like Toyota, General Motors and Volkswagen.
According to Reuters’ sources, VEBA is weighing the benefits of a gradual sale of its stake through an initial public offering against an outright divestment to Fiat.
VEBA is asking over $5 billion for the stake, but Fiat-Chrysler chief executive Sergio Marchionne says the tag was too much. Chrysler was forced by the trust fund to file documents for an IPO this week, after VEBA exercised its rights to do so under the terms of Chrysler's 2009 bankruptcy agreement.
The move was meant to force Marchionne to forge an agreement with VEBA, as the Fiat-Chrysler CEO is seeking to avoid an IPO as it would undermine his merger plans. Fiat has responded by saying that it is now reconsidering its commitment to Chrysler.