Chrysler Group LLC has asked banks to pitch in April for a mandate to manage a possible initial public offering (IPO), four persons privy with the matter told Reuters. Chrysler is expected to hold interviews with investment banks in April 2013 for an underwriting role in a proposed IPO. Three of the people told Reuters that Chrysler has asked bankers to prepare a "dual-track" sale that results to either a flotation of Chrysler shares held by Voluntary Employees' Beneficiary Association -- a retiree healthcare trust of United Auto Workers – or an agreed buyout of trust’s stake by Fiat. Fiat currently holds a 58.5-percent stake in Chrysler, while VEBA controls the remaining 41.5-percent holdings. A Chrysler Group spokesman, however, said he had not heard of an April meeting of bankers for an IPO.
Sergio Marchionne, chief executive of both Fiat and Chrysler, has been aiming to merge the two carmakers, but has disclosed that he would welcome an IPO if the Italian carmaker and VEBA could not come to an agreement. Although the Italian carmaker has options to purchase blocks of shares from VEBA, its attempts to exercise them have been disputed in court over their valuation.
An IPO pitching process could provide a good venue for an independent valuation of Chrysler as well as settle the matter between Fiat and VEBA. The sources told Reuters that Fiat does not intend to cut its ownership of Chrysler. Marchionne disclosed earlier this week that he expected to achieve an agreement with VEBA and prevent a public listing