An IPO is in the works but likely won't launch until the second half of 2011.
While General Motors will launch its long-awaited IPO later this year, don’t expect Chrysler to make its own debut on the stock market until 2011, and probably not until the second half of the year, said Sergio Marchionne, who serves as Chairman and CEO of both the U.S. maker and its partner, Fiat.
The Italian automaker currently holds a 20% stake in Chrysler, which it took after the American manufacturer emerged from bankruptcy last year. But the White House, which manages a 10% stake held by the Treasury, has given Fiat the option to increase its stake by meeting several goals, including the ramp-up of Chrysler’s international presence.
And during a meeting with Fiat shareholders, at the company’s Turin headquarters, Marchionne revealed that Fiat’s stake should soon be bumped up to 25%.
But the critical question is when Marchionne will take Chrysler public again. He has long indicated it won’t happen as soon as at GM – which has been under intense pressure from Washington to begin selling off the government’s 60.1% stake and repay the roughly $50 billion federal bailout.
Chrysler’s IPO, said Marchionne, will be likely in 2011. “I don’t think it will be the first part. I think it’s a second-half year event.”
By the end of 2011, meanwhile, Marchionne intends to hit all three of the government’s bogeys, which would increase Fiat’s stake in Chrysler to 35%.
The first obligation will be met at the end of this year with the launch of the new Fiat 500, which expands Chrysler’s line-up of small, fuel-efficient vehicles.
“We are fulfilling the first of our three obligations to grow the stake to 35%,” Marchionne told Fiat shareholders.
It’s not just Washington that wants Chrysler to go public. The Canadian and Ontario governments would like to recover their investment, which yielded them a 3% stake in the automaker.
Then there’s the United Auto Workers Union, Chrysler’s biggest shareholder, at 67%, through its Voluntary Employee Beneficiary Association. The VEBA was created to help offload Chrysler’s hefty union health care costs from the corporate books.
Separately, Fiat shareholders approved the most sweeping reorganization of the company in its 11-year history, approving the spin-off of subsidiaries Iveco and CNH Global NV, along with some smaller marine and industrial operations. They will now become the new Fiat Industrial SpA.
“Finally, we’re going to be able to allow these businesses to find their way in the marketplace,” the Fiat CEO said.
The reorganization will remove what Marchionne had called a “thorn in the side,” permitting him to focus on Fiat Auto and its various luxury brands, which will compromise the new Fiat SpA.