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Chrysler’s Marchionne Says IPO of U.S. Automaker Isn’t Likely Before 2012

June 4, 2011
3 min to read


Chrysler Group LLC, the U.S. automaker controlled by Fiat SpA, needs more time to show strong financial results before holding an initial public offering, the companies’ top executive said.


“We need an additional track record of performance and probably a better equity market than I’m seeing today,” Sergio Marchionne, chief executive officer of both automakers, told reporters today in Toledo, Ohio.

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Chrysler needs all of this year before an IPO, and there would be “no benefit” in holding one in 2011, he said.


Marchionne is pushing Chrysler this year to raise its global sales by 32 percent to 2 million vehicles and turn an annual profit of $200 million to $500 million, reported Bloomberg. Chrysler last month posted a first-quarter net profit of $116 million, its first since emerging from bankruptcy in 2009, and global sales during that period increased by 18 percent.


Marchionne’s comments came after President Barack Obama visited the Chrysler plant that builds Jeep Wrangler sport- utility vehicles. The U.S. Treasury and Fiat announced a deal yesterday for the Italian automaker to pay $500 million for the U.S. government’s remaining 6 percent stake in Chrysler.


The Treasury said it will receive an additional $60 million as part of an agreement for Fiat to acquire the government’s rights to buy the United Auto Workers retiree health-care trust fund’s stake in Chrysler. The Canadian government will get $15 million from that part of the transaction, the Treasury said yesterday in a statement.


Buying the U.S. stake will raise Fiat’s holding in Auburn Hills, Michigan-based Chrysler to 52 percent. Marchionne has said he expects to receive an additional 5 percent stake in the fourth quarter in return for developing a fuel-efficient car for Chrysler.

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Chrysler wouldn’t need to go forward with an IPO if the trust agreed to sell its stake to Fiat, Marchionne said. While Fiat “technically has the cash” to do a deal with the trust, a Chrysler IPO may be “the easiest way to monetize” the fund’s stake, Marchionne said.


Fiat isn’t in negotiations to acquire the trust’s stake, Marchionne said.


“I expect to work with them to find a way for them to exit at the right time,” he said. “But neither Chrysler nor Fiat is going to be pushed into a position. We’ll do it when it’s ready.”


Marchionne said he’s not sure how the trust could remain an equity partner because it’s “not an investment fund -- they need to satisfy the obligations to the retirees.”


The $500 million that Turin, Italy-based Fiat will pay the U.S. government for its remaining stake puts the value of Chrysler at more than $8 billion, Marchionne said.

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Marchionne is talking with the Canadian government about buying its holding in Chrysler.


Canada isn’t “going to get a better deal than I offered Treasury” on a pro-rata basis, he said. “It’s the deal. I have no other deal.”


Canada holds 1.7 percent of Chrysler, Eileen Wunderlich, a company spokeswoman, said in an e-mail last month.

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